UNIVERSITY  OF  CALIFORNIA,  SAN  DIEGO 


3  1822  0161     7673 


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Central  University  Library 

University  of  California,  San  Diego 
Note:  This  item  is  subject  to  recall  after  two  weeks. 

Date  Due 


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U.C.5.!>-. 
JUNOG  RECD 


0139(1/91} 


UCSDLib. 


THE  UNIVERSITY  LIBRARY 

UNIVERSITY  OF  CALIFOR'I  university  of  California  sandiego 

A  PRIMER  OF  FIl^Al^lC^." '  I   |||;    ""I'l"]] 

3  1822  0161 

AN  HONEST  DOLLAR 

THE  BASIS  OP  PROSPHRITY. 


DAVID  JAYNE  gILL,  LL.D., 

Rochester,  New  Vokk. 


PUBLISHED    BY 

THE   NATIONAL    REPUBLICAN    EXECUTIVE    COMMITTJJ' 

MADISON  SQUARE,  NEW  YORK. 


CONTENTS. 

Introduction      , 

I.  First  Bimetallic  Experiment 

II.  Adoption  of  the  Gold   Standard  . 

III.  Causes  of  the  Demonetization  of   Silver 

IV.  Demonetization  of   Silver  in  Europe   . 
V.  Experimental  Legislation 

VI.  International  Bimetallism 

VII,  Debtors  and  Creditors 

VIII,  Prices  and  Wages 

IX.  Agricultural  Prosperity 

X.  Commercial  Honor 

XI.  Fallacies  of  the  Free  Coinage  Theory 

XII.  Conclusion  ...... 


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INTRODUCTION. 


1.  Present  Importance  of  the  Subject.  —  The  diametrical  opposition  of 
the  platforms  adopted  by  tlic  two  j^reat  political  parties  of  the  United  States  at 
their  recent  conventions,  upon  the  question  of  the  national  currency,  places  the 
monetary  issue  in  the  front  line  of  battle  for  the  presidential  election  of  1896. 
The  American  people  are  once  more  called  before  the  judgment-seat  of  history, 
as  they  were  in  1861.  Those  who  understand  the  character  of  American  citizens 
believe  that  nothing  is  necessary  beyond  a  clear  and  truthful  presentation  of  the 
facts  and  principles  involved  in  this  controversy,  in  order  to  secure  a  just  and 
honorable  settlement  of  the  question,  l^ut  it  is  evident  that  adequate  compre- 
hension of  the  momentous  issues  involved  in  the  inflation  of  the  national  currenc\-, 
and  especially  in  a  sudden  change  of  the  standard  of  value,  is  not  to  be  acquired 
without  serious  and  patient  investigation  on  the  part  of  every  citizen.  It  is,  there- 
fore, of  the  highest  importance  that  the  essential  elements  of  this  great  problem 
be  so  presented  to  the  public  mind  that  every  man  of  intelligence  and  ordinary 
knowledge  of  arithmetic  may  form  his  own  conclusions  regarding  the  justice  and 
expediency  of  the  propositions  put  forward  by  the  party  platforms. 

The  present  sketch  is  intended  to  supply  a  brief  and  intelligible  statement  of 
the  whole  question  at  issue  between  the  parties,  without  partisan  bias,  and  with 
absolute  fidelity  to  the  facts. 

2.  The  Nature  and  Uses  of  Money.  —  The  exchange  of  commodities  is 
essential  to  the  existence  of  civilized  life.  Division  of  labor  gives  to  all  the  great 
advantage  of  profiting  by  the  special  skill  and  facilities  of  each.  In  a  civilized 
state  of  society,  almost  all  the  products  of  every  creator  of  value  are  offered  for 
exchange.  When  they  are  exchanged  directly  against  each  other,  as  wheat  for 
cloth,  the  exchange  is  called  barter.  When  the  exchange  is  effected  by  the  me- 
dium of  some  common  measure  of  value,  as  gold  or  silver,  it  is  called  a  sah\  and 
the  amount  of  the  medium  agreed  upon  is  called  the  price.  Such  a  common 
measure  of  value  is  called  money. 

It  is  evident  that  a  medium  of  exchange  would  not  be  accepted  unless  it  had 
some  definite  relation  to  a  standard  of  value.  Price  is,  therefore,  partly  a  ques- 
tion of  arithmetic,  which  determines  how  m^iny  times  a  unit  of  value  is  to  be  taken 
in  order  to  be  an  equivalent  medium  of  exchange;  but  it  is  primarily  a  question 
of  value,  that  is,  it  has  relation  to  some  object  of  desire.  Whatever  this  object  of 
desire  may  be,  in  order  to  be  a  good  medium  of  exchange  it  must  be  (i)  Measur- 
able, so  as  to  be  capable  of  arithmetical  treatment ;  (2)  Divisible,  so  as  to  be 
separable  into  arithmetical  parts  and  again  united  in  multiples  of  those  parts ; 
(3)  Hovioi^cjieoiis,  so  as  to  be  always  the  same  thing,  without  variation  in  quality 
from  time  to  time  ;  (4)  Portable,  so  that  it  can  be  removed  from  place  to  place, 
and  thus  really  serve  as  a  medium  of  exchange ;  (5)  Durable,  so  that  it  will  not 
easily  perish  during  possession  ;  (6)  Stable  in  value,  so  that  it  will  have  the  same 
purchasing  power  when  it  is  paid  as  when  it  is  promised ;  and  (7)  Recognizable^ 
so  that  it  can  always  be  known  and  its  value  readily  ascertained  by  sight.  ■ 

In  practice  we  have  two  kinds  of  mediums  of  exchange,  both  of  which  are 
called  "  money,"  but  which  need  to  be  clearly  distinguished.  Real  Money  is 
always   a  commodity  of  some  kind.     Representative  Money   is  a  promise  to 

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pay  this,  either  expressed  in  definite  terms  on  the  paper  or  metal  which  serves 
as  representative  money,  or  implied  by  an  authorization  of  law,  or  general  agree- 
ment. Human  nature  the  world  over  has  settled  upon  the  precious  metals,  gold 
and  silver,  as  commodities  fitted  to  constitute  real  money.  If  there  is  a  doubt 
which  of  these  two  is  to  be  preferred  to  the  other,  it  must  be  settled  by  asking 
the  question,  Which  is  most  desired '(  And  if  any  attempt  is  made  to  determine 
how  much  more  one  is  desired  than  the  other,  that  can  be  ascertained  only  by 
discovering  the  market  price  of  one  in  terms  of  the  other,  at  the  time  in  question. 

The  great  bulk,  probably  ninety  per  cent,  of  all  the  business  of  the  country 
is  done  without  money.  It  is  done  on  credit^  that  is,  in  the  faith  that  promises 
to  pay  money  will  be  fulfilled,  if  required.  When  the  credit  of  a  person  or  cor- 
poration is  good,  the  payment  of  money  is  not  required.  Checks,  drafts,  bills 
of  exchange,  promissory  notes,  and  other  forms  of  credit,  are  the  mediums  by 
which  the  world  does  its  largest  business.  The  clearing-houses  equate  these, 
and  balances  only  are  paid  in  money. 

3.  Definition  of  Terms.  —  There  are  a  few  technical  terms  which,  al- 
though in  popular  use,  are  often  misunderstood,  and  therefore  require  to  be 
exactly  defined  before  monetary  questions  can  be  intelligently  discussed. 

(1)  The  distinction  between  "  Pure  "  and  "  Standard  "  gold  or  silver  is 
this  :  "  Pure  "  gold  or  silver  is  free  from  all  alloy,  and  consists  of  the  one  ele- 
ment alone  ;  "  Standard  "  gold  or  silver  contains  an  amount  of  alloy  consisting, 
under  the  present  laws  of  the  United  States,  of  loo  parts  to  the  thousand  of 
copper  in  the  case  of  silver,  and  of  copper  and  silver  in  the  case  of  gold,  to  give 
the  coin  greater  hardness  and  durability  in  use.  Coin  of  standard  gold  or  silver 
is,  therefore,  900  thousandths  fine  ;  that  is,  1,000  ounces  of  standard  coin  contain 
900  ounces  of  pure  metal. 

(2)  "  Free  Coinage  "  means  that  any  one  bringing  gold  or  silver  bullion 
to  the  Mint  may  have  it  coined  into  standard  coin,  without  charge.  The  owner 
of  bullion,  under  a  system  of  free  coinage,  would  receive  one  dollar  in  coin  for 
every  371.25  grains  of  pure  silver  brought  to  the  Mint.  If  the  coin  is  worth  more 
than  the  bullion  by  weight,  the  owner  of  the  bullion  obtains  all  the  profit.  If 
a  silver  dollar  contains  53  cents'  worth  of  silver,  the  depositor  of  bullion  gets  a 
profit  of  47  cents  on  every  dollar  thus  coined.  The  government  gets  nothing, 
but  is  expected  to  keep  the  silver  dollar  at  par  with  gold  dollars  of  nearly  twice 
its  intrinsic  value. 

(3)  When  gold  or  silver  bullion  is  bought  by  the  government  and  coined  into 
money,  if  there  is  a  difference  between  the  price  of  the  bullion  and  the  value  of 
the  coin,  the  government  makes  this  profit,  which  is  called  "  Seignorage." 
■Originally,  it  was  the  charge  which  the  '■''seigneur,''''  or  lord  of  the  realm,  made 
for  coining.     Free  coinage  gives  this  profit  to  the  owner  of  bullion. 

(4)  When  two  metals  are  used  as  standards  of  value,  the  arrangement  is 
called  a  "  Double  Standard."  This  of  course  involves  fixing  a  "  Ratio  "  be- 
tween them,  to  indicate  how  much  of  one  is  equivalent  to  a  given  amount  of  the 
other.  As  the  production  of  both  gold  and  silver  varies  from  year  to  year,  the 
market  value  of  both  is  subject  to  some  variation.  That  of  gold,  as  being  by 
far  the  more  constant  and  unchangeable,  is  regarded  as  the  unit  in  establish- 
ing this  "  ratio  "  between  the  two  metals.  By  recommendation  of  Alexander 
Hamilton,  in  1792,  the  legal  ratio  was  fixed  at  15  to  i  ;  that  is,  fifteen  pounds 
of  silver  were  to  be  regarded  as  equivalent  to  one  pound  of  gold.     This  was 

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very  near  the  true  market  ratio;  but  silver  afterward  fell  in  price  from  over-pro- 
duction, so  that  in  1834  the  ratio  was  changed  to  16  to  1.  The  market  ratio  has 
been  subject  to  constant  variation,  and  now  stands  at  about  31  to  1. 

(5)  The  terms  "Monometallism  "  and  "  Bimetallism  "  are  intended  to 
represent,  respectively,  the  doctrines  held  by  believers  in  a  single  standard,  and 
the  adherents  of  a  double  standard.  "  Monometallist "  might  indicate  an  adhe- 
rent of  the  single  silver  standard  ;  but  there  is  no  class  of  men  in  this  country 
that  advocates  such  a  standard,  which  is  universally  regarded  as  a  mark  of  finan- 
cial debasement.  A  "  Monometallist  "  is,  therefore,  a  believer  in  the  gold  stand- 
ard, holding  that  it  is  impossible  to  fix  a  ratio  by  legislation  which  will  not 
drive  out  one  or  the  other  of  the  two  metals,  and  that  silver  should  therefore 
be  used  only  for  subsidiary  coin.  The  "Bimetallist  "  holds  that  it  is  possible  to 
fix  and  maintain  such  a  ratio.  Most  "  Bimetallists,*'  however,  believe  that  the 
theory  of  a  double  standard  is  practicable  only  by  international  agreement  to 
maintain  a  fixed  ratio  throughout  the  civilized  world. 

(6)  The  expression  "  Legal-Tender"  is  an  important  one  to  understand, 
because  it  gives  rise  to  a  very  serious  error.  A  "  legal-tender  "  is  a  kind  of 
money,  real  or  representative,  in  which  the  payment  of  debts  is  prescribed  or 
authorized  by  law.  Thus,  for  example,  the  government  notes  known  as  "  green- 
backs," first  issued  during  the  Civil  War,  were  mere  promises  to  pay,  without 
date.  At  that  time  the  gold  dollar  was  the  accepted  unit  of  value,  containing 
23.22  grains  of  pure  gold,  or  25.8  grains  of  standard  gold.  But  as  the  "green- 
backs" were  made  a  legal-tender  for  all  debts  between  citizens  of  the  United 
States,  they  were  considered  as  the  legal  money ;  and  gold,  which  was  difficult 
to  obtain,  was  said  to  be  at  a  premiian. 

(7)  At  the  present  time,  the  "  Unit  of  Value  "  in  our  system  of  coinage  is 
the  gold  dollar  of  25.8  grains  of  standard  gold.  As  we  shall  presently  see,  there 
is  a  great  variety  of  representative  money  issued  by  the  government  of  the  United 
States,  only  part  of  which  is  "  legal-tender."  As  long  as  the  treasury  is  prepared  to 
redeem  in  gold,  directly  or  indirectly,  all  of  these  kinds  of  money,  they  are  equally 
good,  and  the  people  will  be  satisfied  to  exchange  them  on  terms  of  equality.  But 
the  moment  public  confidence  is  lost  in  the  ability  or  intention  of  the  government 
to  keep  all  its  money  equal  to  the  standard,  that  moment  gold  will  be  at  a  pre- 
mium, and  a  part  of  the  national  currency  will  depreciate  in  the  hands  of  the 
holders. 

4.  Present  Forms  of  Money  in  the  United  States.  —  The  following 
table  exhibits  the  different  kinds  of  money  now  current  in  the  United  States  :  — 
r       I.    Real  Money  :  Gold  Coin. 

II.    Representative  Money: 


{ 


( I  )  Standard  Silver  Dollars,  unlimited  legal-tender.^ 

Metallic  \  (2)  Subsidiary  Coin,  legal-tender  up  to  $10. 

(3)  Minor  coin,  legal-tender  up  to  25  cents. 

( 1 )  Gold  Certificates,  not  legal-tender. 

(2)  Silver  Certificates,  not  legal-tender. 

(3)  Silver  Treasury  Notes,  unlimited  legal-tender.^ 

(4)  United  States  Notes,  unlimited  legal-tender. ^ 

(5)  Currency  Certificates,  not  legal-tender. 
.(6)  National  Bank-Notes,  not  legal-tender. 


Non-metallic 


The  only  "  real "  money  now  circulating  in  the  United  States  is  gold  coin  ;  foi 
this  alone  is  worth  its  face  value  apart  from  the  element  of  credit.     All  the  other 

1  Except  by  contract  to  the  contrary. 
4    _.     _ 


money  is  "  representative  ;  "  for  it  does  not  possess  value  equal  to  its  face  apart 
from  the  element  of  credit. 

The  standard  silver  dollar  is  now  worth  as  hnlUoii  only  about  one-half  its  face  ; 
for  480  grains  of  silver  bullion  can  be  bought  for  68  cents,  and  the  standard  sil- 
ver dollar  contains  only  371.25  grains,  or  53  cents'  worth,  of  pure  silver.  \\'e 
trust  the  national  government  for  the  remainder. 

The  subsidiary  coin  contains  a  proportionally  smaller  part  of  pure  metal, 
and  is,  therefore,  still  more  charged  with  the  credit  element. 

United  States  notes  are  promises  to  pay  in  coin  ;  while  the  certificates  of  de- 
posit simply  call  for  what  they  indicate,  — gold,  silver,  or  currency.  Of  these,  the 
gold  certificates  alone  specifically  call  for  gold  ;  bufeven  they  contain  a  credit  ele- 
ment, —  faith  in  the  ability  and  intention  of  the  government  to  pay  them  in  gold. 

The  national  bank-notes  are  the  promises  of  national  banks  to  pay  in  lawful 
money  of  the  United  States,  which  includes  all  the  legal-tender  money  already 
described.  They  have  the  endorsement  of  the  government,  and  are  amply  se- 
cured by  deposits  of  United  States  bonds. 

The  Treasurer's  Report  for  July  i,  1896,  gives  the  following  exhibit  of  money 
in  circulation  and  in  the  Treasury  at  that  time,  as  follows  :  — 

IN   CIRCULATION   JULY    I,   1896.                                                     IN   TREASURY   JULY    I,  1896. 

Gold  Coin $    476,128,483  Gold  Coin $111,803,340 

Standard  Silver  Dollars     .  52,175,998        •         Standard  Silver  Dollars   .     .  378,614,043 

Subsidiary  Silver      .     .     .  59)999)8o5  Subsidiary  Silver    .     .     .     .  i5t730,976 

Gold  Certificates      .      .     .  42,320,759  Silver  Treasury  Notes      .     .  34,465,919 

Silver  Certificates     .     .     .  33i>259,509  United  States  Notes    .     .     .  121,229,658 

Silver  Treasury  Notes   .     .  95,217,361  National  Hank-Notes .     .     .  10,668,620 

United  States  Notes      .      .  225,451,358  Gold  Bullion 32,217,024 

Currency  Certificates     .     .  31,840,000  Silver  Bullion Ii9>053,695 

National  Bank-Notes    .     .  215,331,927 

Total $1,529,725,200  Total $823,783,275 

It  will  be  seen  that  about  two-thirds  of  all  the  money  now  in  use  in  the 
United  States  involves,  to  some  extent,  the  element  of  credit.  Hitherto,  since  the 
resumption  of  specie  payments,  Jan.  i,  1879,  that  credit  has  been  above  sus- 
picion. It  is  now,  for  the  first  time,  brought  in  question  by  a  political  party 
whose  propositions  have  created  general  apprehension. 

5.  Opposing  Platforms  of  1896.  —  In  order  to  show  the  peril  with  which 
the  national  credit  is  now  menaced,  the  platforms  of  the  Republican  and  Demo- 
cratic parties  for  1896,  so  far  as  they  relate  to  this  question,  are  presented  below 
for  comparison  :  — 

REPUBLICAN   PLATFORM.  DEMOCRATIC   PLATFOf 

Adopted  at  St.  Louis.  .Idopied  at  Chicago. 

The    Republican    Party   is   unreservedly   for  We  are  unalterably  opposed  to  the 

sound  money.     It  caused  the  enactment  of  the  Single    Gold  standard,   wiiich   has   locked 

law  providing  for  the  resumption  of  specie  pay-  fast  the  property  of  an  industrial  people  in  the 

ments  in    1879  ;    since  then  every  dollar  has  paralysis  of  hard  times.     Gold  mono-nietallism 

been  as  good  as  gold.  is  a  British  policy,  and  its  adoption  has  brought 

We  are  unalterably  opposed  to  every  our  nation  into  financial  servitude  to  London, 

measure  calculated  to  debase  our  cur-  It  is  not  only  un-American,  but  anti-.\merican; 

rency  or  impair  the  credit  of  our  couu-  and  can  be  fastened  on  the  United  States  only 

try.     We  are,  therefore,  opposed  to  the  by  the  stifling  of  that  indomitable  spirit  and  love 

free   coinage   of   Silver  except    by   in-  of  liberty  which  proclaimed  our  political  inde- 

ternational   agreement  with  the   lead-  pendence  in  1776,  and  won  it  in  the  War  of  the 

ing  commercial  nations  of   the   ■world  Revolution. 

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■which  -we  pledge  ourselves  to  pro-  We  demand  the  free  and  unlimited 
mote  ;  and  until  such  agreement  can  coinage  of  both  Gold  and  Silver,  under 
be  obtained  the  existing  Gold  stand-  the  present  legal  ratio  of  16  to  1,  vrith- 
ard  must  be  preserved.  out  w^aiting  for  the  aid  or  consent  of 
All  our  silver  and  paper  currency  must  be  any  other  nation.  We  demand  that  the 
maintained  at  parity  with  gold,  and  we  favor  all  standard  silver  dollar  shall  be  a  full  legal- 
measures  designed  to  maintain  inviolably  the  tender,  equally  with  gold,  for  all  debts,  public 
obligations  of  the  United  States  ;  and  all  our  and  private;  and  we  favor  such  legislation  as 
money,  whether  coin  or  paper,  at  the  present  will  prevent  the  demonetization  of  any  kind 
standard  —  the  standard  of  the  most  enlight-  of  legal-tender  money  by  private  contract, 
ened  nations  of  the  earth. 

It  will  be  seen  that  the  issue  joined  between  the  parties  is.  whether  or  not 
the  United  States  shall  change  the  present  standard  and  adopt  the  free  and 
unlimited  coinage  of  silver  at  a  ratio  of  i6  to  i.  Without  partisan  prejudice, 
we  wish  to  determine  in  a  strictly  scientific  manner,  in  the  light  of  history  and 
experience,  whether  or  not  this  proposition  to  change  our  standard  and  open  the 
mints  of  the  United  States  to  the  free  and  unlimited  coinage  of  silver  at  the 
proposed  ratio  is  honorable  and  expedient. 

The  question  is  made  the  more  interesting  by  the  fact  that  the  financial 
plank  of  the  party  advocating  the  free  coinage  of  silver  was  repudiated  by  a 
large  and  intelligent  minority  in  the  Chicago  convention,  by  the  presentation  of 
the  following  protest :  — 

"  We  declare  our  belief  that  the  experiment  on  the  part  of  the  United  States  alone,  of  free 
silver  coinage  and  a  change  of  the  existing  standard  of  value  independently  of 
the  action  of  other  great  nations,  ^^ould  not  only  imperil  our  finances,  but  retard 
or  entirely  prevent  the  establishment  of  international  bimetallism,  to  ^vhich  the 
efforts  of  the  government  should  be  steadily  directed. 

"  It  ■would  place  this  country  at  once  upon  a  silver  basis,  impair  contracts, 
disturb  business,  diminish  the  purchasing  po^^er  of  wages  of  labor,  and  inflict 
irreparable  evils  upon  our  nation's  commerce  and  industry. 

"  Until  international  co-operation  among  leading  nations  for  the  free  coinage  of  silver  can  be 
secured,  -we  favor  the  rigid  maintenance  of  the  existing  gold  standard  as  essential  to 
the  preservation  of  our  nation  in  redemption  of  our  public  pledges  and  keeping  inviolate  our  coun- 
try's honor.  We  insist  that  all  our  paper  and  silver  currency  shall  be  kept  abso- 
lutely at  parity  with  gold." 

6.  Our  Method  of  Treatment.  —  Such  a  question  as  the  one  under  dis- 
cussion cannot  be  rightly  settled  by  the  mere  wishes  or  opinions  of  any  number 
of  men,  but  demands  a  calm  and  impartial  survey  of  the  facts  of  experience.  We 
propose,  therefore,  to  present  a  series  of  plain  propositions  in  which  our  national 
experience  may  be  summed  up,  and  in  which  the  inductions  derived  from  it  may 
be  easily  grasped.  Each  proposition  will  be  supported  by  the  historic  proofs 
and  economic  facts  of  which  it  is  the  expression.  The  order  of  these  proposi- 
tions will  be,  as  far  as  possible,  conformed  to  the  historical  sequence  of  events, 
so  that  the  present  problem  may  be  set  in  the  clear  light  of  past  experience. 

I.    FIRST  BIMETALLIC    EXPERIMENT. 

The  first  bimetallic  experiment  of  the  United  States,  adopted  in  1792, 
fixed  a  legal  ratio  bet^ween  silver  and  gold  w^hich  drove  gold  out  of 
the  country,  and  reduced  the  currency  to  the  single  silver  standard. 

1.  The  Adoption  of  the  Silver  Dollar. —  From  1782  to  1786  the  Ameri- 
can colonies  seriously  contemplated  the  necessity  of  domestic  coinage.  During 
the  War  of  the  Revolution,  the   unit  of  common   account  was  the   "  Spanish 

6 


milled  dollar."  It  was  expected  that  the  "Continental  currency"  would  be 
redeemed  in  this  coin,  but  the  day  of  redemption  did  not  dawn.  Pounds,  shil- 
lings, and  pence  were  fixed  in  the  traditions  of  the  people ;  but  the  English  coins 
were  driven  out  of  circulation  during  the  war,  and  did  not  return  rapidly  after- 
ward. Numerous  foreign  coins  were  current,  —  French,  Spanish,  and  Portu- 
guese, —  but  the  need  of  a  native  coinage  was  sorely  felt. 

In  1782  Robert  Morris,  Superintendent  of  Finance,  made  proposals  for  the 
establishment  of  an  American  mint,  and  these  received  the  approval  of  the  Con- 
gress of  the  Confederation.  He  believed  that  two  metals,  gold  and  silver,  could 
not  be  used,  because  their  ratio  was  not  constant,  and  recommended  silver  as  the 
standard.  Jefferson  proposed  decimal  denominations,  and  the  dollar  as  the  unit. 
He  saw  that  the  proportion  between  the  values  of  gold  and  silver  "  is  a  vieramtile 
problem  altogether,''  and  said,  ^^  Just  principles  7vill  lead  us  to  disregard  legal  propor- 
tions,''' proposing  to  adjust  the  ratio  to  the  '■'•  market  price.'" 

Nothing  was  done,  however,  until  the  adoption  of  the  Constitution.  In  his 
Report  on  the  EstablisJnncnt  of  a  Mint,  dated  May  5,  1791,  Alexander  Hamilton 
proposed  a  double  standard,  15  pounds  of  silver  being  considered  equivalent 
to  I  pound  of  gold.  Hamilton  saw  that  gold  was  "less  liable  to  variations  of 
value  than  silver,"  and  adopted  it  as  the  unit  by  which  the  ratio  was  to  be  deter- 
mined. "As  long  as  gold,"  he  said,  "either  from  its  intrinsic  superiority  as  a 
metal,  from  its  rarity,  or  from  the  prejudices  of  mankind,  retains  so  considerable 
a  pre-eminence  in  value  over  silver  as  it  has  hitherto  had,  a  natural  consequence 
of  this  seems  to  be  that  its  condition  will  be  more  stationary.  The  revolutions, 
therefore,  which  may  take  place  in  the  comparative  value  of  gold  and  silver,  7i>ill 
be  changes  in  the  state  of  tlie  latter  rather  than  in  that  of  the  former."  He  was, 
nevertheless,  disposed  to  utilize  both  metals  as  far  as  possible,  as  at  that  time 
silver  was,  from  its  prevalent  use  and  value,  not  unsuited  to  the  peculiar  needs 
of  the  country,  whose  volume  of  exchanges  was  not  great,  and  whose  immature 
development  required  the  retention  of  all  its  metallic  wealth. 

2.  Hamilton's  Bimetallic  System.  —  The  Act  of  April  2.  1792,  the  first 
coinage  legislation  under  the  Constitution,  made  the  eagle,  or  ten-dollar  gold 
piece,  the  basis  of  our  gold  coins,  containing  270  grains  of  standard,  or  247.5 
grains  of  pure,  gold.  No  gold  dollars  were  coined  until  1849,  ^'""^  dollar  piece 
being  of  silver,  and  containing  416  grains  of  coin,  or  371.25  grains  of  pure  silver. 
The  ratio  of  value  between  silver  and  gold  was  fixed,  as  Hamilton  had  recom- 
mended, at  15  to  I.  Subsidiary  silver  coins  were  established,  of  corresponding 
weight  and  fineness.  The  coinage  was  to  be  free  of  expense  to  the  depositors  of 
bullion,  thus  establishing  the  privilege  of  "  Free  Coinage  "  for  both  gold  and  sil- 
ver. All  the  gold  and  silver  coins  issuing  from  the  Mint  were  made  '•  lawful 
tender  in  all  payments  whatsoever,"  but  "  those  of  less  than  full  7i>eight  at  values 
proportional  to  their  respective  weightsT 

Three  facts  connected  with  this  first  coinage  law  of  the  United  States  are 
worthy  of  special  note  :  (i)  The  legal  ratio  between  gold  and  silver  was  exactly 
adjusted  to  the  market  ratio  ;  (2)  It  was  believed  that  this  ratio  loould  continue  for 
a  long  time  in  the  future ;  and  (3)  The  bullion  value  of  both  metals  was  recog- 
nized as  the  standard  of  measuretncnt  upon  which  a  just  ratio  should  be  based. 

This  is  a  fitting  place  to  note  the  sophistry  contained  in  the  expression  "the 
money  of  the  Constitution."  The  Constitution  of  the  United  States  makes 
no  provision  for  either  a  monometallic  or  a  bimetallic  standard  of  value,  and  pre- 

7 


scribes  no  system  of  coinage.  It  provides  tiiat  Congress,  and  not  the  legislatures 
of  the  separate  States,  shall  have  power  "  to  coin  money,  regulate  the  Value 
thereof,  and  of  foreign  Coin."  The  Constitution  nowhere  defines  the  material 
of  which  money  shall  be  made,  and  nowhere  implies  a  preference  with  regard  to 
it.  The  only  use  made  of  the  words  "  gold  "  and  "  silver  "  in  the  Constitution 
is  in  the  prohibition  to  the  States  to  make  anything  else  than  coin  a  legal-tender  in 
the  pavment  of  debts  ;  that  is,  it  prohibits  them  from  making  their  own  issues  of 
paper  money  a  legal-tender.  But  there  is  not  one  word  in  the  Constitution  to 
indicate  either  the  substance  or  the  system  of  coinage  which  Congress  might 
subsequently  adopt.  A  demand  for  '"  the  money  of  the  Constitution,"  with  the 
implication  that  the  Constitution  has  established  or  proposed  a  legal  ratio  be- 
tween gold  and  silver,  or  prescribed  their  concurrent  use  as  standards  of  value, 
is,  therefore,  merely  a  resort  of  the  demagogue,  who  is  either  ignorant  of  the 
subject,  or  means  to  impose  upon  the  ignorance  of  others. 

3.  The  Operation  of  Gresham's  Law.  —  The  bimetallic  system  of  Ham- 
ilton started  well ;  but,  after  1793,  there  was  a  steady  decline  in  the  value  of  sil- 
ver as  related  to  gold,  broken  only  by  a  few  spasmodic  rallies,  falling  in  1813  to 
a  ratio  of  16.25  to  i.  At  no  time  between  1793  and  1834  was  the  market  ratio 
so  low  as  the  legal  ratio  of  15  to  i  ;  that  is,  during  that  whole  period,  silver  was 
overvalued  and  gold  was  uiuiervaliied  at  the  United  States  Mint. 

Sir  Thomas  Gresham  has  laid  down  a  principle,  which  has  since  been  known 
as  "  Gresham's  Law,"  as  follows  :  "  When  two  kinds  of  money  of  unequal  value 
are  put  into  circulation  together,  the  cheaper  money  always  drives  out  the 
dearer."  The  truth  of  this  statement  may  be  very  simply  illustrated.  If,  in  the 
same  village,  one  storekeeper  offers  25  cents  per  pound  for  butter,  and  another 
only  20  cents,  the  farmers  of  the  neighborhood  can  gain  5  cents  per  pound  by 
taking  their  butter  to  the  first  storekeeper.  If  this  condition  of  things  continues, 
all  the  butter  will  tend  to  go  to  the  store  where  the  higher  price  is  paid.  Now, 
the  government  Mint  and  the  bullion  market  offered  different  prices  for  silver. 
The  Mint  offered  one  ounce  of  gold  for  every  15  ounces  of  silver,  while  the 
market  offered  16  ounces  of  silver  for  one  ounce  of  gold.  One  ounce  of  gold, 
therefore,  would  buy  16  ounces  of  silver  in  the  market,  15  of  which  could  be 
taken  to  the  Mint  and  exchanged  for  another  ounce  of  gold,  leaving  one  ounce  of 
silver  as  a  profit  on  the  transaction.  The  money  broker  may  be  trusted  to  con- 
duct this  business,  whenever  there  is  an  appreciable  difference  between  the 
Mint  and  the  market  ratios  ;  that  is,  as  long  as  the  Mint  continues  to  be  open. 

In  1806  the  coinage  of  silver  dollars  was  suspended  by  President  Jefferson, 
and  no  more  were  coined  until  1836.  The  whole  number  of  silver  dollars  coined 
down  to  and  including  1805  was  1,459,517.  From  that  time  to  1836,  the  largest 
silver  coins  issued  from  the  Mint  were  half-dollars. 

But  Jefferson's  suppression  of  the  silver  dollar  did  not,  as  intended,  restrain 
the  outflow  of  gold.  According  to  Benton,^  the  circulation  of  gold  "  became 
completely  and  totally  extinguished  in  the  United  States"  in  18 12.  Professor 
Laughlin,  in  summing  up  the  effects  of  this  first  bimetallic  experiment,  says : 
-'  While  nominally  possessing  a  double  standard,  the  country  really  had  only  one, 
and  that  a  silver  standard.  Owing  to  causes  beyond  the  control  of  a  legislature, 
and  which  could  not  have  been  foreseen,  the  value  of  silver  was  so  affected  in 
its  relations  to  gold  as  to  destroy  the  7norking  of  a  bimetallic  system."  ^ 

'   r.enton.  Thirty  Years'  View,  vol.  I,  chap.  cv.  2  Laughlin,  History  of  Bimetallism,  p.  57. 

8 


11.    ADOPTION   OF    THE   GOLD    S'I'ANDARD. 

The  second  bimetallic  experiment  of  the  United  States,  adopted  in  1834, 
fixed  a  legp.l  ratio  between  silver  and  gold  which  drove  silver  out  of  use 
and  reduced  the  currency  to  the  single  gold  standard. 

1.  The  Adoption  of  a  New  Ratio.  —  The  Coinage  Act  of  1834  did  not. 
like  tliat  of  1792,  attempt  to  fix  a  legal  ratio  adjusted  to  that  of  the  market.  I'he 
ratio  adopted  was  that  of  16  to  i  (accurately  15.988  to  i;,  which  undervalued 
silver,  the  market  ratio  being  then  about  15.7  to  1.  It  was  urged  that  the  new 
ratio  would  anticipate  the  expected  continued  fall  in  the  price  of  silver,  which 
experience  seemed  to  justify ;  and  also  that  Spain.  J'ortugal,  Mexico,  South 
America,  and  the  West   Indies  had  rated   silver  to  gold  at    16  to    i. 

2.  The  Suppression  of  Silver.  —  The  effect  of  changing  the  ratio  was 
more  sweeping  than  it  was  expected  to  be.  Gresham's  law  was  brought  into 
operation,  not,  as  in  the  period  1 792-1834,  to  drive  out  gold,  but,  by  the  legal 
undervaluation  of  silver,  to  suppress  its  circulation.  For  $1,570  in  silver,  one 
could  buy  gold  bullion  which  the  Mint  valued  at  $1,600.  One  had  only  to  sell  his 
silver  for  gold,  in  order  to  pay  his  debts  at  a  discount  of  $30  on  every  $1,600,  or 
nearly  two  per  cent.  Silver,  therefore,  ceased  to  be  used  as  money,  and  became 
merely  merchandise.  The  subsidiary  coins  also,  since  they  contained  the  full 
proportion  of  silver,  passed  out  of  circulation  and  became  merchandise,  resulting 
in  a  "small  change"  famine.  Few  persons  born  after  1840  ever  saw  a  silver 
dollar,  except  as  a  curiosity,  until  the  coinage  of  standard  silver  dollars  was 
resumed  in  1878. 

3.  The  Debasement  of  Gold  Coins.  —  In  order  to  adjust  gold  and  silver 
coins  to  the  new  ratio,  leaving  the  silver  dollar  unchanged  at  371.25  grains  of 
pure  silver,  the  gold  eagle  was  reduced  from  247.5  to  232  grains  of  pure  gold. 
This  made  a  difference  of  6.26  per  cent  in  the  value  of  the  gold  coins,  and  facil- 
itated their  use  in  the  place  of  silver,  by  lowering  their  value  to  that  extent. 
The  coinage  of  gold  rose  from  $978,550  in  1833  to  $3,954,270  in  1834. 

The  injustice  done  to  creditors  by  this  change  is  apparent.  Their  lo>s  was 
6.26  per  cent  of  the  amounts  previously  loaned.  It  may  be  instructive  to 
remember  that  the  year  1837  "  was  the  most  trying  one  to  banks,  and  to  busi- 
ness generally,  that  the  country  has  ever  known."'  All  the  Massachusetts  i)anks 
suspended  specie  payments  for  one  year,  and  many  of  them  never  resumed  busi- 
ness.    It  was  largely  owing  to  a  sudden  change  in  the  standard  of  values. 

4.  The  Changes  of  1837. — In  1837  the  amount  of  alloy  was  made  uni- 
form for  both  gold  and  silver  coins, — one-tenth  alloy  and  nine-tenths  pure 
metal,  —  making  all  standard  coin,  as  at  present,  900  thousandths  fine.  Previ- 
ous to  this  time,  gold  coins  were  one-twelfth,  and  silver  coins  one-ninth,  alloy. 
Leaving  the  amount  of  pure  silver  unchanged  at  371.25,  the  weight  of  the  silver 
dollar  was  thus  made  412.5,  instead  of  416,  grains. 

5.  The  Discoveries  of  Gold.  —  The  undervaluation  of  silver  was  rendered 
permanent  for  nearly  forty  years  by  the  enormous  discoveries  of  gold  in  Russia, 
Australia,  and  California.  From  an  average  annual  production  of  about 
$38,000,000  in  1840-1850,  the  gold  supply  was  increased  by  an  annual  produc- 
tion of  more  than  $150,000,000  after  1850.  The  effect  of  the  great  gold  discov- 
eries was  to  give  the  United  States  a  single  gold  staiuhuii,  silver  being  out  of 
circulation  except  as  subsidiary  coin,  which  last  was  kept  in  use  only  by  redu- 
cing the  amount  of  pure  silver  in  such  coin  to  a  ratio  of  less  than  i5'to  i,      » 

9 


m.    CAUSKS    OF   THE    DEMON ETIZATION    OF    SILVER. 

Tile  disuse  of  silver  dollars  resulted  solely  from  the  commercial  relations 
of  gold  and  silver  at  the  legal  ratio  of  16  to  1,  and  not  from  the  so-called 
•'  Crime  of  1873. " 

1.  The  Act  of  1853.  —  A  Coinage  Act  was  passed  in  1853,  having  for  its 
purposes  ( 1  )  The  preservation  of  subsidiary  silver  as  currency,  and  (2)  Tiie  rec- 
ognition of  gold  as  the  only  standard  of  value.  It  was  a  practical  abandonment 
of  the  double  standard  as  a  commercial  impossibility  at  the  16  to  i  ratio.  The 
Act  met  with  but  little  opposition,  and  that  was  chiefly  directed  against  the 
change  of  ratio  for  subsidiary  silver. 

Nothing  was  said  of  the  silver  dollar  in  the  Act  of  1853.  That  had  entirely 
disappeared  from  circulation,  and  it  was  proposed  to  accept  the  fact.  "  Gold  is 
the  only  standard  of  value  by  which  all  property  is  now  measured,"  said  Mr. 
Skelton  of  New  Jersey  :   ''  it  is  virtually  the  only  currency  in  the  country."  ' 

2.  The  Suspension  of  Specie  Payments.  —  Such  was  the  condition  of 
the  standard  of  value  when,  on  account  of  the  Civil  War,  specie  payments  were 
suspended  by  the  United  States,  Dec.  31,  1861.  Then  followed  the  issues  of 
legal-tender  notes  and  of  bonds,  to  provide  means  for  carrying  on  the  war.  Gold 
disappeared  from  the  circulation  ;  but  it  was  still  the  standard  of  value,  and  the 
notes  and  bonds  of  the  government  were  based  upon  that  standard.  Specie  pay- 
ments were  resumed  upon  a  gold  basis,  Jan.  i,  1879,  under  a  law  of  1875. 

3.  The  "  Crime  of  1873."  —  The  Act  of  Feb.  12,  1873,  is  referred  to  by 
the  advocates  of  the  free  coinage  of  silver  as  the  "  Crime  of  1873,"  because 
it  is  alleged  to  have  demonetized  the  silver  dollar.  The  facts  are:  (i)  That  the 
silver  dollar  was  not  driven  out  of  circulation  by  the  Act  of  1873,  for  it  had  not 
been  in  circulation  for  more  than  twenty-five  years ;  (2)  it  did  not  then  for  the 
first  time  cease  to  be  coined  ;  for  up  to  1873  only  $8,031,238  legal-tender  stan- 
dard silver  dollars  had  ever  been  coined,  the  coinage  of  silver  dollars  having  been 
suspended  by  Jefferson  in  1806. 

4.  The  Crime  of  Omission.  —  The  reason  for  referring  to  the  Act  of  1873 
as  a  "crime"  is  found  exclusively  in  its  omissions.  Its  capital  offence  was  the 
omission  of  the  silver  dollar  from  among  the  coins  thereafter  to  be  coined  by  the 
United  States.  As  this  had  not  been  in  circulation,  or  coined  for  circulation,  for 
many  years,  it  is  not  easy  to  justify  the  accusation  of  "crime"  by  its  omission. 

But  it  is  the  circumstances  of  the  omission  that  most  arouse  the  indignation 
of  the  advocates  of  the  standard  silver  dollar.  That  the  step  should  ever  have 
been  taken  with  no  opposition  is  the  unpardonable  wrong.  The  charge  is,  that 
the  bill  was  "rushed'"  through  the  House,  partly  by  secrecy,  and  partly  by  oppo- 
sition to  the  wishes  of  the  meml^ers. 

5.  The  Charge  Refuted.  —  Although  this  charge  of  haste,  secrecy,  and 
arbitrariness  was  fylly  refuted  by  Professor  Laughlin  -  in  1885,  and  again  by  Mr. 
Horace  White  ^  in  1895,  it  continues  to  be  repeated  and  spread  abroad,  as  if  it 
were  true  and  a  just  cause  for  public  indignation.  It  is,  therefore,  necessary  to 
repeat  the  refutation  here. 

The  bill  was  printed  tJiirtecn  times  by  the  Treasury  Department  and  by  Con- 
gress, and  the  proceedings  occupy  one  hundred  and  forty-four  columns  of  the  Con- 
gressiotial  Globe.     It  was  considered  duringyfzr  sessions  of  the  Senate  and  House, 

1  Congressional  Globe,  vol.  xxvi.,  p.  629.  ^  Money  and  Banking,  pp.  213-223. 

2  History  of  Bimetallism,  pp.  92-101. 


and  was  in  progress  for  more  than  two  years.  It  was  referred  to  in  the  Treasurer's 
reports  for  1870,  187  i,  and  1872,  and  passed  through  the  hands  of  thirty  experts 
for  criticism  and  suggestion.  It  was  sent  to  the  House  and  Senate  in  various 
forms,  and  /aid  on  i/tc  desks  of  all  the  7ncmbers.  It  was  debated  by  at  least  four 
members  in  the  House,  who  called  attention  to  the  fact  that  the  gold  dollar  7vas  the 
only  standard  recognized  in  the  bill. 

There  was  no  opposition  in  either  Senate  or  House  to  the  omission  of  the 
silver  dollar  from  the  list  of  coins.  It  was  explained  by  Mr.  Hooper,  of  Massa- 
chusetts, who  had  charge  of  the  bill,  that  "  the  committee,  after  careful  consid- 
eration, concluded  that  twenty-five  and  eight-tenths  grains  of  standard  gold, 
constituting  the  gold  dollar^  should  l)e  declared  the  money  unit.,  or  metallic  repre- 
sentative of  the  dollar  of  account.'  He  also  called  attention  to  the  discontinu- 
ance of  the  silver  dollar  of  412.5  grains. 

The  Law  of  1873  never  having  been  repealed,  although  the  further  coinage  of 
silver  dollars,  as  we  shall  see,  was  subsequently  authorized,  is  still  the  law  of  the 
United  States  with  regard  to  the  standard  of  value.  The  coinage  of  silver  in  the 
three  years  1873-1875,  in  spite  of  the  "Crime  of  1873,'' was  $17,019,664,  an 
excess  over  .he  three  years  before  1873  of  nearly  $10,000,000. 

6.  The  Trade  Dollar.  —  To  avoid  all  possible  confusion,  it  is  important  to 
note  that  the  so-called  "trade  dollar,'"  authorized  in  1873,  was  not  intended  as  a 
legal-tender  coin.  "  The  trade  dollar  was  in  reality  an  ingot,  shaped  like  a  dol- 
lar piece,  but  with  different  devices  than  those  on  the  dollar  of  412.5  gcains;  it 
weighed  420  grains  standard  weight  (that  is,  900  fine),  and,  consequently,  con- 
tained 378  grains  of  pure  silver.  The  cost  of  manufacturing  the  coin  at  the 
various  mints  was  charged  upon  the  owner  of  the  bullion  presented  for  coinage, 
so  that  the  expense  of  melting,  refining,  and  assaying  the  silver,  and  the  expense 
of  making  the  dollar,  was  borne  entirely  by  the  owners  of  bullion,  and  not  by  the 
United  States."  -  It  was  not  intended  for  circulation  in  the  United  States,  but 
for  trade  with  China  and  other  silver  nations,  from  which  fact  it  derived  its 
name. 

7.  The  Myth  of  Ernest  Seyd.  —  We  should  not  leave  this  topic  without 
recalling  the  fact  that  it  was  charged  by  the  advocates  of  the  silver  dollar,  that 
the  "Crime  of  1873  "  was  instigated  by  one  Ernest  Seyd,  of  London,  who,  it  was 
said,  had  brought  from  England  ;i^i 00,000  sterling,  with  which  he  bribed  Con- 
gress to  demonetize  the  silver  dollar  in  the  interest  of  foreign  gold  !  The  only 
foundation  for  this  infamous  slander  was,  that  Mr.  Seyd's  name  was  mentioned 
when  the  bill  was  introduced  into  the  House  as  a  "distinguished  writer"  who 
had  "furnished  many  valuable  suggestions  "  incorporated  in  the  bill.  Mr.  Seyd 
had  not  been  in  this  country  since  1856,  and  was  a  bimetallist,  who,  along  with 
his  "valuable  suggestions,"  as  Senator  Hoar  showed  in  the  Senate  on  the  22d 
of  August,  1893,  from  the  letter  containing  them,  strongly  urged  that  the  provis- 
ion of  the  bill  Ofnifting  the  silver  dollar  be  not  adopted .'  If  the  newspapers  that 
circulated  this  accusation,  and  the  persons  who  invented  it,  have  not  reformed, 
it  is  likely  to  be  revived  and  repeated,  which  is  a  sufficient  reason  for  exposing 
it  anew. 

1  Congressional  Globe,  part  iii..  Second  Session,  42d  Congress,  pp.  2305,  2306. 

2  l.a.ugh\\n,  History  of  Bimetallism,  p.  104. 


II 


rV.    DEMONETIZATION    OF   SILVER    IN    EUROPE. 

The  demonetization  of  silver  by  the  leading  commercial  nations  of  the 
world,  between  1870  and  1880,  was  the  effect  of  the  depreciation  of 
silver,  w^hich  w^as  occasioned  by  its  inferiority  to  gold  as  money,  and 
its  overproduction. 

1.  The  Change  from  Silver  to  Gold  in  France.  —  Between  1852  and 
1864  France  imported  about  $680,000,000  of  gold,  and  exported  $345,000,000  of 
silver.  This  was  the  first  decided  movement,  outside  of  England,  toward  the 
gold  standard ;  but  it  indicated  an  unmistakable  tendency.  In  1867  the  Inter- 
national Monetary  Conference  at  Paris  recorded  its  preference  for  the  single 
gold  standard  ;  and,  from  that  time  forward,  this  was  the  monetary  ideal  of  every 
European  nation.  lUit  France  was  not  aljle  to  pass  out  of  the  double  standard 
stage,  on  account  of  her  enormous  stock  of  silver.  Before  the  transition  to 
a  single  gold  standard  could  be  effected,  the  Franco-Prussian  War  broke  out, 
which  ended  in  the  humiliation  and  defeat  of  France. 

2.  The  Action  of  Germany.  —  The  initiative  for  which  France  was  pre- 
paring was  reserved  for  Germany,  her  conqueror,  to  take.  The  opportunity 
came  when  $54,000,000  was  paid  to  Germany  in  French  gold  coin,  as  a  part  of 
the  war  indemnity.  For  this  advantage  she  had  long  been  waiting,  having  been 
upon  the  silver  basis  since  1857,  through  a  monetary  treaty  with  Austria,  and  the 
expediency  of  the  change  having  been  discussed  and  accepted  since  1868.  The 
silver  coinage  of  the  German  states  was  far  from  uniform.  The  coins  were 
cumbrous  and  inconvenient,  and  the  needs  of  the  new  Empire  demanded  a  gold 
standard.  The  measures  preparatory  to  the  change  were  passed  Dec.  4,  187 1  ; 
but  the  gold  standard  was  not  definitely  adopted  until  July  9,  1873. 

The  value  of  silver  began  to  fall  as  early  as  November,  1872.  By  July, 
1876,  it  had  depreciated  more  than  22  per  cent.  This  depreciation  was,  without 
doubt,  partly  owing  to  the  increase  in  the  production  of  gold,  which  displaced 
silver.  Between  1850  and  1875  about  $3,000,000,000  of  gold  had  been  added 
to  the  world's  stock.  (Germany  therefore  made  her  transition  from  silver  to  gold 
with  perfect  ease.  As  we  shall  presently  see,  the  other  leading  commercial 
nations  soon  followed  her.  The  production  of  gold  during  the  25  years  from 
1850  to  1875  was  as  great  as  in  the  357  years  preceding  1850;  that  is,  since  the 
discovery  of  America.  It  changed  the  money  standard  of  the  world ;  because 
there  was  always  a  universal  preference  for  gold,  and  all  the  commercial  nations 
were  only  awaiting  the  appearance  of  a  sufficient  quantity  to  adopt  it  as  the 
sole  standard. 

3.  The  Latin  Union.  —  As  we  have  already  seen,  France  was  making  prep 
arations  for  the  adoption  of  the  gold  standard  when  the  Franco-Prussian  VVai 
broke  out.     "The  public  applauded  the  introduction  of   gold   in   the  place  o; 
silver,   for   the   same   reasons   that   had    earlier    attracted    the    English   people 
namely,  gold  pieces  are  more  easily  handled,  a  certain  amount  can  be  carriec 
more  conveniently,  and  counting  takes  less  time."  ^     The  Latin  Union  had  beei 
created  in  1865  by  France,  Belgium,  Switzerland,  and   Italy,  afterward  addinj 
Greece.     Dec.  23,   1865,  a  treaty  between   the  four  countries  first  named  wa^ 
signed,  adopting  a  uniform  token  coinage  of  silver.     In  1873  the  Mints  of  th 
Union  were  crowded  with  silver  bullion.     On  Jan.  30,  1874,  a  meeting  of  dek 
gates  was  called,  and  limited  the  number  of  five-franc  silver  pieces  that  shouL 


1  M.  Chevalier  in  Journal  des  Economistes,  June,  1876,  p.  444. 
12 


I 


be  coined  during  that  year.  This  was  a  suspension  of  free  coinage,  and  it  has  never 
been  resumed.  This  act  has  been  denounced  by  the  advocates  of  free  silver  as  a 
'*  great  wrong  "  to  that  metal,  and  as  a  cause  of  the  depreciation  that  had  already 
begun,  and  has  ever  since  continued.  It  was  simply  an  act  of  self-preservation. 
Whatever  its  effect  upon  the  subsequent  value  of  silver  may  have  been,  "  the 
suspension  of  the  free  coinage  of  five-franc  silver  pieces  by  the  Latin  Union  was 
Zi  consequence  of  the  falling  value  of  silver."^  In  1877  the  Latin  Union  entirely 
suspended  the  coinage  of  five-franc  pieces  for  that  year,  except  in  Italy ;  and  in 
a  treaty  of  Nov.  5,  1878,  in  order  to  prevent  gold  from  disappearing  and  being 
replaced  by  silver,  complete  suspcnsioji  was  adopted. 

4.  The  Action  of  Other  Countries. —  Prior  to  1847,  Holland  had  a  double 
standard,  with  a  ratio  of  15.6  t(>  1.  In  that  year  she  adopted  a  silver  standard. 
In  1873  and  1874  the  coinage  of  silver  was  several  times  temporarily  suspended  ; 
and  in  June,  1875,  i^  ^^-^  discontinued  indefinitely.  Austria-Hungary,  although 
on  a  paper  basis,  closed  her  mints  to  the  free  coinage  of  silver  in  1879,  and  is 
endeavoring  to  resume  specie  payments  on  a  gold  standard,  which  was  adopted 
in  1892.  Even  British  India,  which,  for  special  reasons,  has  been  favorable  to 
silver,  owing  to  the  small  transactions  that  prevail  in  her  internal  trade,  and  the 
native  love  of  silver  ornaments, —  used  as  depositories  of  their  wealth  by  the 
natives,  —  abandoned  the  free  coinage  of  silver  in  June,  1893.  Spain  sus- 
pended silver  coinage,  except  on  government  account,  in   1878. 

There  is,  at  present,  not  a  mint  in  Europe  opoi  to  the  free  coinage  of  siker. 
The  leading  countries  of  the  world  may  be  classed  as  follows,  as  regards  their 
monetary  standards,  meaning  by  "standard"  the  present  accepted  measure  of 
value  :  — 

Double  .Standard. 

Argentine  Republic. 

Bulgaria. 

Chile.2 

Haiti. 

Hawaii. 

Java. 

Japan. 

Nctherlands.2 

Philippine  Islands. 

Servia. 

Spain. 

Uruguay. 

Venezuela. 


Silver  Standard. 

Bolivia. 

Central  America. 

China. 

Colombia. 

Ecuador. 

India. 

Mexico. 

Peru. 

Russia. 


Gold  .Standard. 
Austria-Hungary. 
Belgium. 
Brazil. 
Canada. 
Denmark. 
Egypt. 
France. 
Germany. 
Great  Britain. 
Greece. 
Italy. 
Norway. 
Portugal. 
Sweden. 
Switzerland. 
Turkey. 
United  States. 

An  examination  of  the  list  will  show  that  all  the  most  highly  civilized  nations 
whose  people  have  extensive  commercial  interests  are  upon  the  gold  standard, 
while  most  of  the  others  are  semi-civilized  or  barbaric.  The  full  significance  of 
this  fact  is  well  stated  by  Professc^r^^ghlin  when  he  says,  "  In  considering  this 
movement  in  monetary  progress,  tli^^ibstitution  of  gold  for  silver,  and  compar- 
ing it  with  similar  events  in  industrial  progress  in  almost  every  branch  of  activity, 
no  illustration  seems  to  me  more  exactly  to  describe  the  change  caused  by  the 
introduction  of  gold  than  that  of  steam.  In  former  days  the  world  carried  on  its 
exchanges  by  the  slow,  uncertain,  and  clumsy  methods  of  coaches,  wagons,  and 
sails  ;  now  all  is  done  at  less  expense,  more  rapidly  and  conveniently,  by  railways 

1  Laughlin,///.y/tfr>  of  Bimetallism,  p.  156.  -  -About  to  adopt  a  gold  standard. 

13 


and  steamships.  Both  coaches  and  railways  existed  to  transfer  passengers  and 
freight ;  so  both  gold  and  silver  were  used  to  interchange  goods.  Formerly 
coaches  were  our  chief  dependence  ;  so  was  it  with  silver.  In  later  years  the 
railway  has  supplanted  the  coach,  because  it  does  the  same  service  much  better, 
leaving  the  coach  to  do  minor  work  in  other  directions  ;  in  the  same  way  gold  is 
supplanting  silver,  because  it  serves  the  needs  of  commerce  better,  and  silver  is  rel- 
egated to  use  as  subsidiary  coin  for  retail  transactions.  Consequently,  when  there 
is  offered  to  a  commercial  country  the  choice  between  using  gold  and  using  silver, 
we  should  as  soon  expect  it  to  prefer  silver  as  we  should  expect  merchants  to-day 
to  send  their  goods  to  New  York  or  to  Chicago  by  wagons  instead  of  by  railway.^ 

V.    EXPERIMENTAL   LEGISLATION. 

The  movement  for  the  free  and  unlimited  coinage  of  silver  in  the  United 
States  is  the  lineal  descendant  of  greenback  inflation,  and  the  experi- 
mental legislation  of  1878  and  1890  was  a  compromise  in  palliation  of 
this  extreme. 

1.  The  Greenback  Delusion.  —  At  the  close  of  the  Civil  War,  the  United 
States  found  itself  burdened  with  an  enormous  debt  ($2,844,649,626),  and  with 
a  paper  currency  worth  about  seventy-five  cents  on  the  dollar.     A  speculative 
period  followed,  in  which  real  estate  and  other  property  were  greatly  overvalued, 
and  vast  sums  were  borrowed  for  speculative  purposes.    The  Western  States  were 
in  particular  the  field  for  ambitious  enterprises,  undertaken  in  a  spirit  of  adven- 
turous excitement.     The  collapse  of  credit  and  prices  in  1873,  not  occasioned 
by  the  demonetization  of  silver,  —  which,  as  we  have  seen,  was  more  largely 
coined  that  ever  before,  —  but  by  the  overstrain  of  the  credit  system,  involved 
the  great  distress  of  debtors,  particularly  in  the  West.     When  the  crisis  came, 
the  debtors,  having  consumed  what  they  had  borrowed,  and  finding  themselves 
without  means  of  payment,  began  to  feel  that  it  was  cruel  in  the  creditor  to 
require  his  own,  and  that  he  should  be  paid  off  in  the  cheapest  money  possible. 
They  were,  therefore,  opposed  to  the  resumption  of  specie  payments,  which  was 
authorized  by  the  Resumption  Act  of  1875.     "  Weighed  down  by  debt,  and  led] 
by  skilful  politicians,  or  impelled  by  selfish  interest,  the  greenback   faction  de- 
manded that  the  government  should  come  to  the  aid  of  debtors,  and,  by  plentiful  i 
issues  of  United  States  notes,  create  an  inflation  which  should  enable  them  to  get] 
off  the  shoals  of  debt  on  the  tide  of  rising  prices,"     How  the  greenbacks  were] 
ever  to  get  into  the  hands  of  the  people,  unless  the  government  distributed  them  I 
by  mail  to  the  unfortunate  debtors  that  demanded  them,  still  remains  a  mystery.  1 
The  government  might  print  its  notes  by  the  billion,  with  no  other  result  than  to 
destroy  its  own  credit,  unless  they  were  paid  out  of  the  treasury.     They  were 
to  be  used  in  paying  off  the  United  States  bonds,  which  were  drawn  in  coin.    The 
greenback  advocates  were  not,  however,  solicitous  about  this  point  of  honor.     If - 
greenbacks  were  good  enough  for  the  people,  they  were  good  enough  for  the! 
bondholders.     But,  as  the  debtors  that  wanted  money  were  not  bondholders,] 
this  redemption  of  bonds  in  greenbacks  would  not  put  money  directly  into  theirj 
hands.     It  would,  however,  accomplish  two  things:  (i)  It  would  inflate  the  ciir-\ 
raicy,  and  (2)   It  would  effect  a  partial  rcpudiatioti  of  the  war  debt.     Upon  thej 
tide  of  cheaper  money  they  dreamily  hoped  to  float  into  prosperity  ! 

2.  The  Rise  of  the  Free  Coinage  Movement.  —  The  greenback  delusion! 
was  effectually  dissipated  in  its  original  form  by  President  Grant's  veto  of  the| 

1  History  of  Bimetallism^  p.  168. 
14 


bill,  and  by  defeat  in  the  elections  of  1876.  "  The  demand  for  the  coinage  of 
silver  dollars  began  where  the  cry  for  unlimited  paper  money  left  off.'  The 
debtors  and  the  demagogues  continued  their  mission,  but  with  a  new  and  unex- 
pected alliance.  They  had  objected  to  the  purchase  and  coinage  of  silver  in  the 
Greenback  Platform  of  1876  ;  but  when  it  was  perceived  that  a  silver  dollar  was 
worth  only  ninety  cetits  as  bullion,  the  inflationists  saw  their  opportunity.  The 
greenback  idea  was  gradually  abandoned,  and  its  former  advocates  have  since 
been  rallied  under  the  banner  of  the  free  and  unlimited  coinage  of  silver. 

The  friends  of  inflation  and  repudiation  saw  in  silver  a  new  means  of  accom- 
plishing their  end.  Now,  for  the  first  time,  it  was  discovered  that  a  "  crime  ''  had 
been  committed  in  1873,  when  the  standard  silver  dollar  was  dropped  from  the 
list  of  coins.  Being  at  that  time  (1876)  a  ninety-cent  dollar,  it  represented  to 
them  at  least  ten  per  cent  of  inflation  and  repudiation.  They  could  now  make 
both  appear  vastly  more  respectable.  Government  notes  should  be  issued,  based 
on  a  deposit  of  coin;  the  United  States  bonds  should  be  paid  in  coin:  but  it 
should  be  sih<cr,  and  not  gold. 

3.  The  Bland-Allison  Bill.  —  On  the  25th  of  July,  1876,  a  bill  was  intro- 
duced in  the  House  by  Mr.  Richard  I'.  Bland  of  Missouri.  Dec.  13,  1876,  a 
substitute  was  adopted,  authorizing  the  free  coinage  of  standard  silver  dollars  of 
412.5  grains,  as  provided  in  the  Act  of  1837. 

The  Senate,  however,  gave  the  bill  no  attention ;  and  it  was  again  introduced 
in  the  House,  and  passed  without  debate,  Nov.  5,  1877.  The  bill  reached  the 
Senate  Dec.  6,  1877.  It  was  reported  by  Mr.  Allison  of  Iowa  for  the  Committee 
on  Finance,  with  important  amendments.  The  free  coinage  provision  was  re- 
moved ;  and  the  Secretary  of  the  Treasury  was  authorized  to  purchase  from  time 
to  time,  at  the  market  price,  not  less  than  two  million  nor  more  than  four  million 
dollars'  worth  of  silver  bullion  per  month,  and  cause  the  same  to  be  coined 
monthly,  as  fast  as  purchased,  into  dollars  of  412.5  grains  each.  Provision  was 
made  also  for  payment  into  the  treasury  of  seignorage  arising  from  this  process, 
and  a  limit  was  fixed  which  the  amount  of  money  invested  in  silver  should  not 
exceed.  Silver  certificates  were  authorized,  corresponding  with  the  denomina- 
tions of  United  States  notes,  receivable  for  all  public  dues,  but  not  a  legal-tender. 
Thus  amended,  and  with  a  provision  for  an  international  monetary  conference 
for  agreement  with  other  countries  regarding  a  common  ratio  between  gold  and 
silver,  the  bill  passed  the  Senate  Feb.  15,  1878. 

Although  unsatisfactory  to  the  silver  party  in  the  House,  because  it  was 
stripped  of  its  free  coinage  elements,  it  was  accepted,  and  went  to  the  President 
to  sign  ;  but  was  returned  with  his  veto  Feb.  28,  1878.  In  his  message  of 
the  preceding  December,  President  Hayes  had  said  :  "  If  the  United  States  had 
the  undoubted  right  to  pay  its  bonds  in  silver  coin,  the  little  benefit  from  that 
process  would  be  greatly  overbalanced  by  the  injurious  effect  of  such  payment, 
if  made  or  proposed  against  the  honest  convictions  of  the  public  creditors."  At 
the  same  time,  in  his  annual  report.  Secretary  Sherman,  of  the  Treasury,  had 
said,  quoting  from  a  previous  letter  :  "  As  the  government  exacts  in  payment 
for  bonds  their  full  face  in  coin,  it  is  not  anticipated  that  any  future  legislation 
of  Congress,  or  any  action  of  any  Department  of  the  Government,  will  sanction 
or  tolerate  the  redemption  of  the  principal  of  these  bonds,  or  the  payments  of 
the  interest  thereon,  in  coin  of  less  value  than  the  coin  authorized  by  law  at  the 
time  of  their  issue,  —  being  gold  coin." 

IS 


It  was  feared  by  the  President  and  the  Secrttary  of  the  Treasury  that  the 
assurances  which  had  been  given  when  the  bonds  were  sold  would  be  set  aside  if 
the  Bland  Act  became  a  law.  Mr.  Bland  had  said  in  the  House  :  "  I  give  notice 
here  and  now  that  this  war  will  never  cease,  so  long  as  I  have  a  voice  in  this 
Congress,  until  the  rights  of  the  people  are  fully  restored  and  the  silver  dollar 
shall  take  its  place  alongside  the  gold  dollar.  Meanwhile,  let  us  take  what  we 
have,  and  supplement  it  immediately  on  appropriation  bills ;  and  if  we  cannot  do 
that,  /  am  in  fai'or  cf  issuing  paper  money  enough  to  stuff  do7vn  the  bondholders 
until  they  are  siek."  ' 

It  was  fear  of  this  sentiment  of  repudiation  that  led  President  Hayes  to  veto 
the  bill.  In  the  veto  message  he  said  :  "The  silver  dollar  authorized  is  worth 
eight  or  ten  cents  less  than  it  purports  to  be  worth,  and  is  made  a  legal-tender 
for  debts  contracted  when  the  law  did  not  recognize  such  coin  as  lawful  money. 
It  is  my  firm  conviction  that  if  the  country  is  to  be  benefited  by  a  silver  coinage, 
it  can  only  be  done  by  the  issue  of  silver  dollars  of  full  value,  7vhieh  will  defraud 
no  man.  A  currency  worth  less  than  it  purports  to  be  worth  will  in  the  end 
defraud  not  only  creditors,  but  all  who  are  engaged  in  legitimate  business,  and  none 
more  surely  than  those  7i'ho  are  dependent  on  their  daily  labor  for  their  daily  bread.' ^ 

The  bill  was  passed  over  the  veto  by  both  branches  of  Congress  on  the  day 
it  was  returned  by  the  President,  and  thus  became  a  law. 

4.  The  Reasons  for  Compromise.  —  The  fact  that  the  Bland- Allison  Act 
was  passed  by  both  branches  of  Congress  over  the  President's  veto  shows  that 
the  bill  was  a  political  necessity.  The  only  other  alternative  was  an  out-and-out 
free  coinage  bill.  It  must  be  remembered  also  that  it  was  a  great  gain  over  the 
issue  of  greenbacks,  and  satisfied  some  at  least  of  the  requirements  for  "  hard 
money."  There  was  a  general  and  irresistible  clamor  for  "  more  money  ;  "  and 
this  was  not  without  reason,  for  the  per  capita  of  currency  in  circulation  was 
only  $15.32  in  1878,  as  against  $20.57  in  1865.  It  was  not  evident  to  all  that 
silver  might  not  rally  and  come  back  to  its  recently  lost  value.  It  was  only  a  few 
years  since  it  had  been  out  of  circulation,  simply  on  account  of  its  high  7'alue. 
The  Monetary  Commission  of  1875  had  made  a  report  favorable  to  the  coinage 
of  silver,  and  there  were  hopes  of  an  international  agreement  that  would  restore 
the  use  of  silver  as  money  in  Europe.  It  may  be  easy  to  dismiss  these  consid- 
erations now,  but  it  was  not  so  easy  then.  It  is  not  a  just  ground  of  reproach 
to  have  believed  in  1878  that  the  free  coinage  of  silver  might  prove  a  public 
benefit,  as  many  able  men  honestly  did  believe  who  do  not  believe  it  now.  But 
this  does  not  exculpate  the  men  who  advocated  the  free  coinage  of  silver  because 
it  would  be  an  instrument  of  inflation  and  repudiation.  It  is  fortunate  that  wisdom 
sufficiently  prevailed  to  avoid  such  a  result.  The  only  practicable  course  was 
that  of  compromise,  and  that  course  was  pursued. 

5.  The  Sherman  Act.  —  In  1890  a  free  coinage  bill  was  passed  by  the 
Senate  on  the  17th  of  June.  The  House  refused  to  concur;  but  a  Conference 
Committee  reported  a  bill  now  known  as  the  Sherman  Act,  which  became  law 
July  14.  This  measure  provided  that  the  Secretary  of  the  Treasury  should  buy 
4,500,000  ounces  of  silver  each  month,  at  the  market  price,  and  pay  for  it  with 
"  Treasury  notes,"  to  be  redeemed  by  the  Secretary  of  the  Treasury  in  either 
gold  or  silver  coin,  at  his  discretion ;  "  it  being  the  established  policy  of  the 
United  States  to  maintain  the  two  metals  oti  a  parity  with  each  other  upon  the 

1  Congressional  Globe,  vol.  cxxxvii.,  p.  1250. 
16 


present  legal  ratio,  or  such  ratio  as  may  be  provided  by  law."  The  Treasury 
notes  were  made  "legal-tender  in  payment  of  all  debts,  public  or  private,  except 
where  otherwise  expressly  stipulated  in  the  contract." 

This  law  was  a  compromise  substitute  for  the  free  coinage  bill,  passed  by 
the  Senate  and  rejected  by  the  House.  It  increased  the  amount  of  silver  coined 
into  standard  dollars,  or  deposited  for  the  redemption  of  Treasury  notes,  which 
was  a  necessary  concession  to  the  advocates  of  free  coinage.  It  secured  in 
exchange  for  this  concession  the  "  parity  "  between  gold  and  silver  at  the  legal 
ratio;  that  is,  it  pledged  the  credit  of  the  government  to  maintain  the  "policy" 
of  keeping  the  silver  dollar  equal  to  the  gold  dollar.  Under  this  Act,  i68,- 
000,000  ounces  of  silver  were  bought,  28,000,000  ounces  were  coined,  producing 
$36,000,000  in  silver  dollars;  and  $156,000,000  of  Treasury  notes  were  issued. 
The  law  was  repealed  and  became  inoperative  Nov.  i,  1893. 

6.  The  Gold  Reserve.  —  In  1882  Congress  created  a  fund  of  $100,000,000, 
known  as  the  "  Gold  Reserve."  It  was  intended  as  a  safety  fund  for  the  redemp- 
tion of  United  States  notes,  and  has  been  called  "the  barometer  of  public  confi- 
dence." Its  presence  has  sustained  the  assurance  that  the  I'nited  States  will 
continue  its  "policy"  of  keeping  all  its  issues  of  money  of  equal  value.  When 
this  reserve  falls  below  the  amount  indicated,  $100,000,000,  the  Secretary  of  the 
Treasury  is  required  to  suspend  the  issue  of  gold  certificates.  The  gold  reserve 
has  been  several  times  reduced,  but  has  been  restored  by  the  sale  of  bonds  for 
gold. 

7.  The  Results  of  Silver  Legislation.  —  The  results  of  the  Bland-Allison 
and  Sherman  bills  may  be  specified  as  follows :  — 

(1)  The  government  of  the  United  States  now  has  in  its  possession  the  lar- 
gest stock  of  full  legal-tender  silver  of  any  civilized  nation  in  the  world.  —  in  the 
aggregate,  $624,000,000,  exceeded  only  by  India  and  China. 

(2)  The  government  has  bought  the  greater  part  of  this  silver  on  a  fall  in ^^ 
market,  the  annual  average  ratio  of  silver  to  gold  having  fallen  from  17.94  to  i  in 
the  year  1878,  when  the  Eland-Allison  law  was  passed,  to  1894,  when  it  was  32.56 
to  I.  Or,  to  state  it  differently,  the  silver  dollar,  apart  from  the  element  of  credit. 
—  that  is,  as  silver  bullion,  —  was  worth  ninety-three  cents  in  1878,  and  was  worth 
forty-nine  cents  in  1894.  To  put  the  matter  in  a  still  different  form,  a  dollar 
that  should  have  contained  416.66  grains  of  pure  silver  in  1876  would  require 
756.04  grains,  to  be  of  equal  value  in  1894.  The  reason  for  this  depreciation  is 
apparent,  when  it  is  remembered  that  the  silver  production  of  the  United  States 
and  of  the  world  has  more  than  doubled  since  1878  ;  while  that  of  Europe  has 
more  than  quadrupled,  with  not  a  single  European  mint  open  to  the  free  coinage 
of  silver.  By  the  depreciation  of  silver  now  owned  by  the  United  States,  the 
government  has  lost  between  fifty  and  sixty  millions  of  dollars. 

(3)  The  fluctuations  of  the  gold  reserve,  occasioned  by  the  heavy  exporta- 
tions  of  gold,  Indicate  a  timidity  on  the  part  of  foreign  holders  and  buyers  of 
American  securities ;  for,  as  we  have  seen,  the  gold  reserve  is,  to  some  extent,  an 
indicator  of  public  confidence  in  the  ability  and  purpose  of  the  government  to 
maintain  the  gold  standard.  While  it  has  not  been  destructive,  it  cannot  be  said 
that  the  silver  legislation  has  been  favorable  to  the  foreign  credit  of  the  United 
States.  We  have  been  shipping  gold  abroad  when  we  should  have  been  sending 
to  Europe  its  value  in  wheat  and  other  products.    The  intimations  are  plain,  that 

17 


a  further  move  in  the  direction  of  the  free  coinage  of  silver  would  drain  the  coun- 
try still  further  of  its  gold,  instead  of  increasing  other  exports. 

(4)  It  should  be  clearly  noted  that  the  silver  legislation  of  the  United  States 
has  had  no  prrmanent  effect  in  restoring  the  price  of  silver  or  arresting  its  decline. 
It  has  steadily  fallen,  in  spite  of  all  efforts  to  sustain  the  market  by  purchase. 
The  Sherman  Act  in  1890  produced  a  temporary  rally,  but  this  was  purely  specu- 
lative and  of  short  duration.  During  1891  the  price  fell  back  to  its  former  level, 
and  went  on  falling,  until  the  law  was  repealed.  It  is  evident  that  nothing  but 
strictly  "  unlimited  coinage,"  if  confined  to  the  United  States,  could  appreciably 
raise  the  price  of  silver,  except  in  the  same  spasmodic  way.  Even  this  would 
not  restore  the  value  of  silver. 

8.  The  Policy  of  Parity.  —  If,  in  the  light  of  all  these  facts,  we  ask  the 
question,  What  has  maintained  an  honest  dollar  in  the  United  States?  that  is, 
a  dollar  of  uniform  and  international  value,  we  must  answer,  //  is  the  policy  of 
parity  betiveen  all  dollars  issued  by  the  government.  Any  time  within  the  last 
twenty  years,  the  free  coinage  of  silver  would  have  sent  gold  to  a  premium,  and 
enforced  upon  the  people  a  debased  dollar,  intiicting  a  partial  repudiation 
of  debts  and  the  destruction  of  credit.  We  can  see,  in  the  consequences  of 
compromise  legislation,  which  has  hitherto  been  the  only  available  means  of  resist- 
ing free  coinage,  what  a  complete  concession  would  have  involved.  The  govern- 
ment has  put  its  credit  between  the  people  and  financial  ruin,  and  the  people 
have  trusted  it.  The  issue  before  the  people  now  is.  Shall  the  policy  0/ parity  be 
maintained  1 

VI.    INTERNATIONAL   BIMETALLISM. 

The  only  way  to  restore  to  silver  its  former  value  is  by  agreenient  between 
the  leading  commercial  nations  of  the  -world  to  maintain  a  uniform 
international  ratio  by  apportioned  purchases  of  bullion. 

1.  The  Magnitude  of  the  Problem.  —  The  world's  production  of  silver 
for  1894  was  $215,404,600.  The  world's  silver  coinage  for  that  year  was  $106,- 
945,740.  About  one-half  the  product,  therefore,  was  coined;  the  other  half  was 
added  to  the  market  stock.  Is  any  single  country  in  the  world  capable  of  ab- 
sorbing this  surplus  in  its  annual  coinage  ? 

It  must  be  remembered  that  the  value  of  silver  fell  constantly  from  1878  to 
1893,  when  India  was  absorbing  one-third  of  the  world's  annual  surplus  product, 
and  the  United  States  nearly  another  third.  But  since  the  closing  of  the  Indian 
mints  to  silver,  for  the  protection  of  Indian  commerce,  this  large-annual  surplus 
has  been  accumulating.  It  is  evident  that,  under  a  free  coinage  law  at  16  to  i, 
all  this  accumulation  of  silver,  as  well  as  the  greater  part  of  the  annual  surplus 
product,  would  be  thrown  into  the  United  States  mints,  inflating  our  currency 
beyond  any  precedent  in  human  history.  Before  the  value  of  silver  could  be 
permanently  restored,  the  American  dollar  would  be  upon  a  Mexican  basis,  which 
is  only  another  way  of  saying  that  the  restoration  of  silver  by  converting  it  into 
cheap  money  is  a  foolish  dream. 

The  impossibility  of  the  free  coinage  of  silver  at  a  ratio  of  16  to  i  by  any 
single  country  without  a  depreciation  of  currency  is  evident  from  the  following 
table,  which  shows  the  total  annual  production  of  gold  and  silver  in  millions  of 
dollars,  the  market  ratio  between  them,  and  the  value  of  a  sih^er  dollar  from 
1870  to  1894. 

18 


YEAR. 

GOLD. 

SILVER. 

RATIO. 

SILVER 
DOLLAR. 

YEAR. 

GOLD. 

SILVSR. 

RATIO. 

SfLVER 
DOLLAR. 

1870 

106 

51 

15-57 

1.0267 

1882 

102 

Ill 

18.19 

.87 

I87I 

107 

61 

15-57 

1.0257 

1883 

95 

"5 

18.64 

.85 

1872 

99 

65 

15-63 

1.0225 

1884 

lOI 

105 

18.57 

.86 

1873 

96 

81 

15.92 

1.0046 

1885 

108 

118 

19.41 

.82 

1874 

90 

71 

16.17 

.98 

1886 

106 

120 

20.78 

.76 

187s 

97 

80 

16.59 

.96 

1887 

105 

124 

21.13 

-75 

1876 

103 

87 

17.88 

.89 

1888 

no 

140 

21.99 

•72 

1877 

114 

81 

17.22 

.92 

1889 

123 

162 

22.09 

-72 

1878 

119 

95 

17.94 

.89 

1890 

118 

172 

19.76 

.81 

1879 

109 

96 

18.40 

.86 

I89I 

130 

177 

20.92 

.76 

1880 

106 

96 

18.88 

.88 

1892 

146 

197 

23.72 

.67 

188I 

103 

102 

18.16 

.88 

1893 

155 

208 

26.49 

.60 

1894 

180 

215 

3256 

•49 

2.  A  Possible  Solution.  —  It  is  evident,  however,  that,  if  the  annual  sur- 
plus product  were  apportioned  among  the  nations  of  the  commercial  world  by  an 
international  agreement,  the  burden,  which  would  crush  the  shoulders  of  a  single 
giant,  might  be  carried  without  great  danger.  It  would,  of  course,  expand  the 
currency  of  the  world,  but  it  would  do  so  uniformly  and  equably.  Judging  from 
the  results  of  the  International  Monetary  Conferences  held  in  1878,  1881,  and 
1892,  no  nation  of  Europe  is  desirous  of  abandoning  the  gold  standard,  or  of 
inflating  its  currency  by  a  larger  use  of  silver.  The  result  of  the  P^russels  Con- 
ference is  well  summed  up  by  Mr.  Horace  White,  when  he  says,  "The  secret 
thought  of  the  delegates  was  something  like  this:  'What  would  happen  the 
day  after  international  bimetallism,  if  people  should  continue  to  prefer  one  ounce 
of  gold  to  sixteen  ounces  of  silver?'"^  It  maybe  adventurous  to  conjecture 
"secret  "  thoughts  ;  but  it  is  certain  that  the  Conference  was  not  prepared,  with- 
out more  argument,  to  adopt  a  bimetallic  recommendation. 

3.  Why  Europe  Takes  Our  Gold.  —  It  is  an  undoubted  fact  that  the 
partial  disuse  of  gold  by  the  United  States,  the  Bland  and  Sherman  laws  having 
put  nearly  $600,000,000  of  silver  in  its  place,  has  made  it  easier  to  send  our  gold 
abroad  than  it  would  have  been,  had  we  not  displaced  it  with  these  large  issues 
of  silver  money.  Instead  of  taking  our  agricultural  products  in  exchange  for  our 
importations,  Europe  has  drawn  upon  us  for  gold.  We  have,  by  this  exportation 
of  gold,  contributed  to  the  maintenance  of  the  exclusive  gold  standard  in  Europe 
by  furnishing  supplies  of  that  metal  instead  of  retaining  it  ourselves.  It  is  the  opin- 
ion of  a  distinguished  German  bimetallist.  Dr.  Otto  Arendt,  that,  if  "  the  United 
States  had  declined  every  compromise  and  aimed  solely  at  international  bimetal- 
lism, the  silver  depreciation  and  the  scarcity  of  gold  would  have  been  more 
severe  in  Europe,  and  a  transition  to  bimetallism  would  long  ago  have  been 
found."'-  He  adds:  "If  it  is  now  desired  to  perpetuate  the  gold  standard  in 
Europe,  let  the  government  at  Washington  adopt  free  coinage  of  silver  at  the 
ratio  of  16  to  i.  At  present,  after  the  closure  of  the  Indian  mints,  this  step 
could  not  possibly  have  any  other  result  than  to  make  the  American  standard  a 
silver  standard.  The  price  of  silver,  of  course,  would  rise,  but  not  to  59  pence, 
and  not  permanently.  The  United  States  would  have  a  standard  not  materially 
different  from  that  of  Mexico.  All  the  disadvantages  and  all  the  advantages  of 
a  fluctuating  and  depreciated  money  standard  would  follow.  Gold  monometal- 
lism would  be  replaced  by  silver  monometallism  ;  the  double  standard  would 

1  White,  Money  and  Banking,  p.  107. 

2  Dr.  Otto  Arendt,  in  the  North  American  Rci'iew  for  June,  1S96. 

19 


become  nominal.  No  bimetallist  can  approve  of  this.  Free  coinage  of  silver  in 
the  United  States  would  result  in  harm  to  Europe,  no  doubt,  but  also  in  advan- 
tage. Perhaps  the  harm  would  predominate  ;  but  one  thing  is  certain  :  I'he  ab- 
sorption of  tlic  Americiin  gold,  the  lOiitliiiuil  supplies  coming  from  the  American  gold 
production,  7i<ouldfor  a  long  time  to  come  relieve  the  European  powers  of  all  anxiety 
for  their  gold  standard.  .  .  .  Only  by  insisting  in  all  countries  in  an  unequivocal 
manner  on  the  international  solution  of  the  currency  question  can  international 
bimetallism  be  attained.  '  No  more  experiments  !  '  is,  therefore,  the  only  appeal 
which  the  European  bimetallists  address  to  those  of  America;  no  silver  pur- 
chases, no  silver  coinage,  otherwise  than  on  the  basis  of  international  agree- 
ment; and  no  more  abortive  attempts  to  bring  them  about." 

In  connection  with  this  profound  and  instructive  insight  into  the  subject,  it  is 
important  to  remember  that,  under  a  system  of  free  coinage  of  silver,  our  gold 
would  vanish  more  rapidly  than  ever  before,  being  taken  in  return  for  our  im- 
ports, instead  of  our  wheat  and  other  cereal  products.  To  Europe,  gold  would 
remain  the  standard  of  value.  Our  exports  would  be  paid  for  by  foreign  coun- 
tries in  depreciated  silver.     Our  imports  would  be  paid  for  in  gold. 

Vn.    DEBTORS   AND   CREDITORS. 

The  free   coinage  of  silver  v/^ould  -work  injustice   betTveen  debtors  and 
creditors,  but  it  is  not  certain  w^liich  would  suffer  most. 

1.  The  Delusion  of  Cheap  Money.  —  It  is  evident  that  the  free  coinage 
of  silver  would  increase  the  amount  of  credit  money  in  the  country  without  in- 
creasing credit,  and  that  it  would,  therefore,  be  more  difficult  than  now  to  main- 
tain the  parity  of  silver  dollars  with  gold.  It  is  thought  by  many  that  this  is  not 
necessary.  If  the  government  issues  dollars  in  great  quantities,  prices  will  rise  ; 
and  so,  relatively  to  other  things,  money  will  be  plenty,  that  is,  it  will  be  cheap. 
One  dollar,  if  it  is  a  legal-tender,  will  do  as  well  as  another  to  pay  debts  with  ; 
and  when  dollars  are  plenty,  it  will  be  easier  to  pay  debts. 

All  this  is  true,  and  yet  the  statement  contains  a  most  vicious  fallacy.  If  we 
double  the  amount  of  money  in  circulation,  it  would  seem  as  if  we  could  buy 
tivice  as  much.  We  cannot  do  so,  however  ;  because  everything,  except  labor, 
will  cost  twice  as  much.  What  is  the  advantage  of  having  two  dollars,  each 
worth  fifty  cents,  over  having  one  dollar  worth  one  hundred  cents  ?  It  is  cer- 
tain that,  by  doubling  the  amount  of  money  in  circulation,  we  shall  not  be  able  to 
obtain  with  our  money  as  much  as  we  do  noiv.  When  silver  bullion  is  taken  to  the 
United  States  Mint,  and  fifty  cents  worth  of  it  is  paid  for  by  the  government 
with  a  silver  dollar,  who  gets  the  money  ?  The  dealer  in  bullion  or  the  mine- 
owner  that  sends  it  there.  Rut  how  will  that  help  you  to  get  any  more  money  ? 
The  silver  speculator  may  make  millions,  but  you  are  no  better  off  than  before. 
But  he  will,  perhaps,  spend  his  money,  and  it  will  go  into  the  circulation.  How 
is  this  money  to  get  into  your  possession?  That  is  the  interesting  question.  It 
may  be  deposited  in  a  bank,  or  carried  to  Europe  in  a  letter  of  credit ;  but  you 
will  not  be  benefited  by  that. 

At  the  present  time  the  United  States  has  a  larger /^r  capita  circulation  than 
Great  Britain,  which  has  $20.78  to  each  person,  while  we  have  $23.59.  France 
and  Belgium  have  a  larger/^/-  capita  circulation  than  either  Great  Britain  or  the 
United  States,  and  yet  they  are  not  so  wealthy,  nor  is  wealth  more  evenly  distrib- 
uted.   The  people  of  those  countries  hide  their  gold  and  silver  in  their  beds,  and 

20 


I 


bury  it  in  the  fields  ;  while  the  American  people  put  their  money  in  the  banks 
and  pay  it  out  in  checks,  so  that  a  small  amount  of  money  does  a  great  deal  of 
service  in  balancing  exchanges.  Moreover,  we  have  never,  since  the  settlement 
of  the  country,  had  so  large  an  amount  of  money  in  circulation  as  in  the  last  few 
years.  In  i860,  it  was  only  $13.85  to  each  person;  in  1865,  when  greenbacks 
were  plenty,  it  was  only  $20.57.  It  cannot  be  said  with  truth  that  there  is  too 
little  money.  The  chief  difificulty  has  been  to  get  possession  of  it ;  but  doubling 
its  quantity  in  the  hands  of  speculators  will  not  help  us  to  do  that. 

2.  The  Motive  to  Inflation.  —  When  we  touch  the  bottom  of  the  mat- 
ter, it  becomes  evident  that  the  great  motive  to  silver  inflation,  apart  from  the 
owners  of  mines  and  of  bullion,  is  that  //  will  make  easier  the  pcjytneiit  of  debt.  It 
cannot,  of  course,  be  pretended  that  this  is  a  just  or  an  honorable  motive;  for 
what  the  debtor  is  supposed  to  gain,  the  creditor  is  supposed  to  lose.  It  is 
justified  by  the  ignorant  and  by  the  sophistical,  by  referring  to  the  "Crime  of 
1873,"  and  by  the  pretence  that  gold  has  appreciated  so  that  it  is  more  difficult 
to  get  than  it  was  in  former  years  ;  for  which  the  only  proof  is  that  general 
prices  are  lower,  which  may  as  easily  be  caused  by  good  crops  and  general  pro- 
ductiveness as  by  a  rise  in  the  value  of  gold.  If  gold  is  rare  in  the  United 
States,  which  possesses  the  largest  stock  of  any  nation  in  the  world  e.xcept  Ger- 
many, it  is  because  it  has  been  largely  exported,  and  driven  out  of  circulation  by 
the  free  silver  movement;  and  yet  it  has  not  gone  to  a  premium.  If  any  one 
imagines  that  the  natural  supply  of  gold  is  decreasing,  let  him  consult  the  last 
table,  from  which  he  will  see  how  the  annual  product  has  increased. 

Nor  does  it  cover  the  point  of  honor  to  say  that  existing  debts  were  con- 
tracted upon  a  silver  basis,  and  are  now  required  to  be  paid  in  gold.  Most  ex- 
isting debts  were  contracted  in  "  lawful  money  of  the  United  States,"  which,  at 
the  time  they  were  contracted,  was  gold,  silver,  and  paper,  kept  at  parity  by  the 
prudent  policy  of  the  government.  Justice  requires  that  these  debts  be  paid  in 
the  same  kind  of  money  that  was  borrowed  ;  but  this  argument  cannot  be  ex- 
pected to  prevail  with  the  Dick  Turpin  consciences  of  political  demagogues, 
who  pretend  to  rob  the  rich  for  the  benefit  of  the  poor,  while,  in  truth,  they  are 
robbing  both  for  the  benefit  of  themselves. 

3.  Debtors  and  Creditors.  —  Nearly  every  man  in  a  civilized  state  of 
society  stands  constantly  in  the  double  relation  of  debtor  and  creditor.  He 
always  owes  some  one,  and  some  one  always  owes  him.  The  only  exception  is 
the  absolute  pauper.  A  man  who  owes  more  than  is  owing  to  him  will  not  be 
likely  to  pay  his  debts  in  any  kind  of  money,  however  cheap.  He  is  insolvent. 
A  man  to  whom  more  is  owing  than  he  owes  is  not,  on  that  account,  a  proper 
mark  for  fraud,  unless  prosperity  is  a  crime  to  be  punished  by  those  not  guilty 
of  it.  All  men,  therefore,  are  deeply  interested  in  that  relation  between  debtor 
and  creditor  called  "  credit."  Primarily,  it  is  faith  in  human  sincerity  and  hon- 
esty. In  savage  and  barbaric  communities  it  does  not  exist.  It  is  the  highest 
fruit  of  civilized  society,  and,  therefore,  the  most  sacred.  \\'hen  the  debtor 
makes  war  on  the  creditor,  "  credit  "  is  destroyed,  and  is  not  easily  restored. 
The  extinction  of  credit  shows  itself  first  in  a  panic,  every  one  seeking,  as  soon 
as  possible,  to  recover  his  own  before  it  is  too  late.  This  inevitably  involves 
financial  ruin  to  men  of  all  classes  ;  for  it  means  paralysis  of  production,  distri- 
bution, and  consumption,  an  arrest  of  all  economic  functions  except  the  collection 
of  debts. 

21 


Can  it  be  supposed  for  a  moment  that  men  will  wait  for  what  is  due  them 
when  money  is  steadily  depreciating  in  value  ?  The  sooner  debts  are  recovered 
under  such  circumstances,  the  better  for  the  creditor.  Will  he  be  likely  to  wait 
for  the  slow  machinery  of  legislation  to  invalidate  his  debt,  or  will  he  collect  it 
as  soon  as  possible  ?  Now,  the  proposition  for  the  free  and  unlimited  coinage 
of  silver  operates  for  the  invalidation  of  debts  by  making  them  payable  in  a 
cheaper  money.  The  Chicago  platform  contains  a  threat  io  force  this  inferior 
money  upon  every  one,  by  making  it  illegal  to  draw  contracts  in  any  other 
money.  Can  that  be  good  money,  which  must  be  forced  upon  people  against 
their  will.'  Is  not  this  threat  a  threat  to  debase  the  currency?  If  not,  why  is 
it  necessary  to  compel  people  to  make  contracts  in  it,  and  forbid  their  employing 
the  present  standard  '>  A  bad  dollar  that  no  one  wants  to  take  is  a  dishonest 
dollar  when  a  debtor  is  forced  to  take  it.  It  impairs  every  existing  contract,  and 
the  freedom  of  contract.  It  is  a  blow  at  the  right  of  property,  and  at  simple 
equity  between  man  and  man,  and  has  in  it  the  seed  of  anarchy. 

Let  us  now  suppose  that  such  inflation  and  consequent  depreciation  are 
forced  upon  the  business  world  :  how  would  it  operate  .?  Every  creditor  would 
be  disposed,  as  quickly  as  possible,  to  collect  his  debt  before  money  had  lost  its 
present  value.  Most  mortgage  debts  are  now  collectable,  being  usually  drawn 
for  one  to  three  years.  Foreclosures  would  follow ;  numerous  properties  would 
be  thrown  upon  the  market ;  buyers  would  be  few ;  the  creditors  would  bid  in 
the  properties,  and  the  debtors  would  lose  their  equities  in  them.  All  gold 
would  be  withdrawn  at  once  from  the  circulation,  which  would  involve  a  serious 
contraction  of  the  volume  of  currency.  For  a  time,  money  would  be  less  plenty 
than  it  is  now.  Credit  ivotild  be  extinguished,  and  it  must  be  remembered  that 
ninety  per  cent  of  the  business  of  the  country  is  done  on  credit.  It  is  no  exaggeration  to 
say  that  the  debtor  would  be  crushed  under  his  burdens.  What  is  propagated  as 
the  debtor's  deliverance  would,  in  all  probability,  prove  to  be  the  debtor's  doom. 

4.  Who  are  the  Debtors  ?  —  It  is  important  just  here  to  consider  who 
are  the  greatest  debtors  in  the  United  States.  First  come  the  United  States 
Government,  the  States,  and  the  municipalities.  Considered  with  reference  to 
their  bonds,  when  not  drawn  in  gold,  the  free  coinage  of  silver  is  meant  to  be  a 
measure  of  partial  repudiation.  But  many  State  and  municipal  bonds  are  drawn 
in  gold  for  long  terms.  Unless  some  legal  quibble  should  defraud  the  debtor, 
gold  would  have  to  be  bought  at  a  premium  for  the  interest  and  principal  of  such 
bonds,  creating  an  additional  burden  of  taxation. 

Among  the  largest  debtors  are  the  railways.  Their  bonds  are  largely  drawn 
in  gold ;  and  a  premium  upon  it  would  not  only  wipe  out  all  dividends,  but,  in 
most  cases,  render  the  companies  insolvent,  with  the  consequences  of  insolvency 
to  their  employees,  stockholders,  and  bondholders.  When  it  is  remembered  how 
many  thousands  of  widows,  orphans,  and  prudent  people  who  have  saved  a  little 
money  hold  municipal  or  railroad  securities,  the  enormity  of  the  proposition  to 
defraud  the  creditor  becomes  apparent. 

The  next  class  of  debtors  on  the  list  is  the  banks  of  deposit.  Nearly  all  the 
money  of  the  people  is  intrusted  to  them,  with  nothing  to  show  for  it  but  a  credit 
on  the  bank's  books.  Suppose  all  these  depositors  want  their  money,  in  antici- 
pation of  its  depreciation  :  what  would  happen?  The  banks  would,  of  necessity, 
be  closed,  and  all  payments  suspended.  It  may  be  said.  Why  should  people 
want  to  withdraw  their  money  under  a  free  coinage  law,  when  they  can  be  paid 

22 


in  silver  now  i  The  answer  is  very  simple.  Because  a  silver  dollar  is  no^v  as 
good  as  a  gold  dollar,  on  account  of  the  policy  of  parity  which  the  government  has 
established  and  thus  far  maintained  ;  but  the  free  coinage  of  silver  7vould  destroy 
this  parity.  No  one  wants  "cheaper  money"  who  can  get  back  the  good  money 
he  parted  with.  For  that  reason,  every  one  who  can  will  try  to  get  it  back,  when 
it  is  in  serious  danger,  and  will  refuse  to  wait  until  its  full  recovery  is  impossible. 

5.  Who  are  the  Creditors  ? —  But  now  let  us  see  who  the  greatest  credi- 
tors are.  Prominent  among  them  are  the  savings  banks,  with  4,354,045  deposi- 
tors, and  $1,575,594,678  of  deposits,  mostly  loaned  on  bond  and  mortgage.  Who 
are  these  depositors  who  constitute  so  large  a  class  of  creditors  t  They  are 
chiefly  laboring  people,  who,  by  economy  and  prudence,  have  saved  little  sums 
averaging  from  $50  to  $500.  These  are  the  creditors  who  are  to  receive  their 
hard  earnings  in  "  cheap  money,"  —  in  dollars  worth  fifty  cents  ! 

Another  large  class  of  creditors  is  the  life  insurance  companies.  In  the 
United  States  they  have  policies  in  force  to  the  amount  of  $9,681,497,447.  and 
affecting  probably  25,000,000  persons.  The  funds  of  these  companies  are  chiefly 
invested  in  mortgage  bonds.  Could  these  companies  ever  pay  their  risks,  if  they 
were  defrauded  of  half  their  investments  ?  Most  of  them  would  certainly  become 
insolvent,  and  fail  to  pay  the  policy  holders.  Those  that  survived  could  pay  only 
in  proportion  to  what  they  received  as  creditors.  And  who  are  these  policy  hold- 
ers .-^  They  are  men  of  all  classes,  —  ministers,  teachers,  professional  men,  mer- 
chants, farmers,  clerks,  whose  savings  have  been  sufficient  to  enable  them  to 
take  out  a  policy  of  insurance  on  their  lives,  for  the  sake  of  their  wives  and  chil- 
dren when  their  hands  fall  helpless  and  their  busy  brains  are  still.  And  these 
rapacious  creditors,  also,  are  to  be  paid  in  '*  cheap  money " 

VIII.    PRICES   AND   WAGES. 

The  free  coinage  of  silver  -would  increase  the  cost  of  living,  but  ■w^ould  not 
increase  proportionally  the  -wages  of  labor. 

1.  The  Wage-earner  as  Creditor.  —  It  is  important  to  remember  that, 
among  the  creditors  of  the  country,  the  largest  class  consists  of  the  wage-earning 
part  of  the  population.  More  than  any  other  class,  the  wage-earners  are  share- 
holders in  the  great  creditor  institutions  for  saving  and  for  mutual  insurance; 
but,  apart  from  this,  they  are  directly  and  personally  prospective  creditors  to  the 
whole  extent  of  their  income.  All  who  are  paid  for  their  services,  whether  by 
the  day,  week,  month,  or  year,  at  fixed  rates,  belong  to  the  class  of  expectant 
creditors.  For  them,  and  for  all  who  would  deal  justly  by  them,  the  question  is, 
How  would  they  be  affected  by  the  free  coinage  of  silver  ? 

2.  The  Difference  between  Commodities  and  Services.  —  Whoever 
has  a  commodity  for  sale  can  put  upon  it  an  anticipatory  price.  He  may  not 
get  it  to-day,  but,  if  he  holds  on,  he  may  get  it  to-morrow.  This  is  what  leads  to 
speculation  in  wheat,  cotton,  bullion,  and  other  commodities.  An  anticipatory 
price  is  a  speculative  price. 

It  is  impossible  to  speculate  in  personal  services  with  any  success.  A  man 
who  withholds  his  labor  in  the  hope  of  getting  a  higher  price  for  it,  usually  loses 
his  place,  and  is  thrown  out  of  work.  By  uniting  with  others,  he  may  sometimes 
and  for  a  while  force  an  increase  of  wages  ;  but,  while  this  process  of  forcing  is 
going  on,  he  remains  idle,  and,  consequently,  without  pay.  He  must  sell  his 
services  to-day,  or  he  loses  to-day's  income. 

23 


This  important  difference  between  commodities  that  can  be  kept  for  a  profit, 
and  labor  that  cannot  be  withlield  except  at  a  loss,  is  the  principle  that  operates 
to  raise  prices  witlioiit  raisin;^  Ti^u/j^rs,  or  to  raise  prices  much  more  rapidly  t/ian  wages. 

3.  The  Verdict  of  Experience.  — This  principle  is  not  merely  theoretical ; 
it  is  proved  and  illustrated  by  universal  experience.  A  f  j\v  examples  \vill  serve 
to  establish  this. 

The  statistics  of  wages  and  prices  for  the  period  from  the  beginning  of  the 
Civil  War  and  the  issue  of  legal-tender  notes  are  excej^tionally  full  and  accurate. 
Says  Professor  Taussig  :  — 

'•  Money  wages  responded  with  unmistakable  slowness  to  tlie  inflating  influences  of 
the  Civil  War.  In  1865,  when  prices  stood  at  217  as  compared  with  100  in  1S60,  wages 
had  onlv  touched  143.  The  course  of  events  at  this  time  sliows  the  truth  of  the  common 
statement,  that,  in  times  of  inflation,  wages  rise  /ess  quickly  than  prices,  and  that  the 
period  of  transition  is  one  0/ hardship  to  the  wage-receiving  class.''''  ^ 

The  same  fact  is  shown  by  the  data  of  Senator  Aldrich's  Report  on  Wages, 
submitted  to  the  Senate.  It  is  also  clearly  brought  out  in  this  report,  that  when 
wages  were  highest,  their  purchasing  power  was  not  proportionally  increased. 
When  a  laborer  received  $1.00  per  day  in  i860,  he  was  better  off  than  when  he 
received  $1.48  in  1865.  In  i860  the  purchasing  power  of  his  wages  was  equiv- 
alent to  $1.00;  but  in  1865  it  was  equivalent  to  only  78  cents.  After  the  re- 
sumption of  specie  payments,  wages  continued  to  increase,  and  their  purchasing 
power  also,  with  slight  variations,  and  were  never  before  so  high  as  in  1890-1891, 
when  their  purchasing  power  considerably  exceeded  that  of  any  preceding  year. 

A  comparison  of  wages  paid  for  all  kinds  of  labor  shows  that  they  are  uni- 
formly higher  in  gold  standard  countries  than  in  countries  on  a  silver  basis,  and 
higher  in  the  United  States  than  anywhere  else  in  the  world."'' 

Japan  is  a  good  example  of  a  country  upon  a  silver  basis.  Her  money  has 
constantly  depreciated  in  value;  but  while  the  price  of  staples  in  Japan  has 
risen  28  per  cent,  wages  have  increased  only  14  per  cent,  or  only  half  as  rapidly. 
Gold  will  buy  more  there  now  than  at  any  previous  time,  —  showing  that  the 
rise  in  prices  is  wholly  illusory  ,  for  it  is  a  rise  in  a  depreciated  money. 

Mexico  is  a  sufficiently  near  neighbor  of  the  United  States  to  be  particularly 
instructive.  Wages  have  risen  nominally  in  Mexico  within  the  last  few  years,  as 
silver  has  depreciated,  but  less  rapidly  than  prices ;  and  they  are  from  one-third 
to  one-half  lower  than  they  are  in  the  United  States.  The  exchange  value  of  a 
Mexican  silver  dollar,  containing  more  silver  than  the  American  dollar,  is  about 
54  cents. 

Wages  would,  possibly,  rise  in  this  country  under  a  system  of  free  coinage,  but 
much  more  slowly  than  the  prices  of  commodities.  To  sustain  the  present  scale 
of  living,  it  would  be  necessary  that  they  should  be  doubled.  No  sane  man  can 
dream  of  this.  The  injustice  of  free  coinage  to  the  wage-earner  is,  therefore^ 
evident.     //  ^oould  double  his  cost  of  living  jvifhout  doubling  his  income. 

IX.     AGRICULTURAL    PROSPERITY. 
The  free  coinage  of  silver  would  not  conduce  to  the  agricultural  prosper- 
ity of  the  United  States,  -which  will  profit  most  from  general  prosperity. 

1.  The  Agrarian  Argument.  —  The  movement  for  the  free  coinage  of  sil- 
ver has  been  promoted  by  a  propaganda  originating  in  the  silver-producing  States, 

1  Quoted  by  White,  Money  and  Banking,  pp.  163,  164.  2   World  Almanac  for  1896,  pp.  158,  159. 

24 


and  addressing  itself  chiefly  to  the  agricultural  classes.  Aside  from  the  incite- 
ment of  sectional  jealousy  and  hostility,  the  movement  has  proceeded  mainly 
along  this  line  of  argument:  (i)  Parallel  with  the  fall  in  the  value  of  silver, 
there  has  been  a  decline  in  the  price  of  agricultural  products,  especially  wheat; 
(2)  This  decline  is  owing  to  the  demonetization  of  silver  by  the  "  Crime  of  1873." 
the  appreciation  of  gold,  and  the  efforts  of  Wall  Street  and  foreign  powers  to  keep 
the  United  States  on  a  gold  standard  ;  ('3)  The  only  cure  for  this  unjust  state  of 
things  is  to  overcome  the  political  supremacy  of  the  East,  through  the  free  and 
unlimited  coinage  of  silver  at  the  old  ratio  of  16  to  i. 

These  teachings  have  been  spread  throughout  the  country,  especially  in  the 
West  and  South,  by  a  wide  distribution  of  literature,  and  the  personal  work  of 
agents  sustained  by  the  wealth  of  the  silver-producing  interests.  Large  numbers 
of  honest  men,  unfamiliar  with  the  facts  of  our  monetary  history,  or  with  the 
great  principles  that  underlie  economic  relations,  have  been  deceived  by  the  mis- 
representation of  facts,  and  the  fallacies  of  reasoning  contained  in  these  teachings. 

2.  The  Relation  of  W^heat  and  Silver. — The  representations  of  the 
advocates  of  free  coinage  have  created  the  impression,  in  many  minds,  that  there 
is  a  natural  relation  of  equivalence  between  412.5  grains  of  standard  silver  and  a 
bushel  of  wheat.  This  great  staple,  which  was  worth  a  dollar  a  bushel  in  1872, 
is  now  worth  only  about  fifty  cents.  Wheat,  therefore,  seems,  at  first  sight,  to 
to  have  followed  the  fortunes  of  the  silver  dollar ;  and  if  we  could  once  more 
make  that  dollar  the  standard,  it  would  seem  as  if  we  might  thereby  restore  the 
price  of  wheat. 

The  absurdity  of  this  idea,  however  striking  at  first  thought,  becomes  appar- 
ent when  we  consider  that  there  is  no  causa/  relation  between  the  two  orders  of  fact. 
Wheat  and  silver  rise  and  fall  in  value,  quite  independently  of  each  other,  accord- 
ing to  the  fluctuations  of  demand  and  supply.  The  prices  current  show  this 
clearly.  In  186 1  wheat  was  as  low  as  55  cents  a  bushel,  yet  a  silver  dollar  was 
then  worth  more  than  a  gold  dollar.  In  1882  wheat  was  worth  $1.40,  and  a  sil- 
ver dollar  was  worth  only  85  cents  in  gold.  In  1894  wheat  was  as  low  as  50 
cents  a  bushel,  and  a  silver  dollar  was  equal  to  only  46  cents  in  gold.  It  is  evi- 
dent that  there  is  no  natural  relation,  not  to  speak  of  a  divinely  appointed  har- 
mony, between  the  silver  dollar  and  a  bushel  of  wheat ! 

The  fact  of  a  decline  in  the  price  of  wheat  is  evident,  but  the  inference  as  to 
its  cause  is  wholly  false.  What,  then,  is  the  true  explanation  .-•  Since  1872  the 
grain-growing  area  has  increased  with  a  rapidity  unprecedented  in  the  history 
of  the  world.  Enormous  new  tracts  have  been  devoted  to  the  raising  of  wheat 
In  both  North  and  South  America  and  in  Asia.  In  the  United  States  alone, 
the  development  has  been  remarkable.  In  1875  the  acreage  of  wheat  growing 
in  this  country  was  26,381,512  acres.  In  1891  it  was  39,916,897  acres,  an  in- 
crease of  more  than  50  per  cent.  The  crop,  in  1875,  was  292,126,000  bushels,  the 
largest  in  many  years;  but  in  1891  it  was  more  than  loo  per  cent  greater,  being 
611,780,000  bushels.  There  has  been,  also,  a  large  increase  in  the  production 
of  other  cereals,  some  of  which  are  competitive  with  wheat. 

It  is  obvious  that  the  true  cause  of  the  decline  of  agricultural  prices  is  not  the 
fall  in  the  value  of  silver. 

3.  The  Relation  of  Wheat  and  Gold.  —  The  second  assumption  of  the 
free  coinage  theory  is,  that  the  price  of  grain  has  fallen  because  of  the  mainte- 
nance of  a  gold  standard.     We  have  seen,  in  the  discussion  of  Proposition  ^T.^ 

■  25 


how  absurd  it  is  to  believe  that  free  coinage  by  the  United  States  alone  could 
have  absorbed  the  surplus  silver  of  the  world  without  making  its  money  valueless. 
We  have  also  seen,  in  Proposition  III.,  how  baseless  is  the  accusation  made 
regarding  the  "Crime  of  1873."  The  abuse  of  Wall  Street  and  the  intimation 
of  foreign  influence  are  equally  without  foundation.  Wall  Street,  no  doubt,  has 
enough  sins  to  answer  for  ;  but  its  intiuence  upon  legislation  has  not  been  to 
corrupt  the  standard  of  money,  and  it  has  not  been  equal  in  measure  to  that  of 
the  free  coinage  propaganda. 

The  source  of  the  silver  produced  in  the  United  States  in  1893,  the  amount 
from  each  State  or  Territory,  with  the  population  of  each,  may  be  stated  as 
follows  :  — 

STATE  OR  TERRITORY.  VALUE  OF   SILVER.  POPULATION,    189O. 

Arizona  1 $  2,935, 7CX)  59.620 

Cilifornia 470,100  1,208,130 

Colorado 25,838,600  412,198 

Idaho 3,919,600  84,385 

Montana 16,945,000  132,159 

Nevada      1,561,300  45'76i 

New  Mexico! 459-40°  153-593 

Utah 7,196,300  207,905 

All  Others 674,000                            

Total $60,000,000  2,303,751 

Here  are  eight  States  and  Territories  which  produce  practically  all  the  silver 
of  the  United  States,  with  an  annual  increase  of  wealth  of  $60,000,000,  and  a 
population  of  less  than  two  and  a  half  millions,  complaining  that  the  East  has 
had  too  large  a  share  in  national  legislation,  and  stirring  up  sectional  hostility  on 
this  account.  With  a  proportional  Congressional  representation,  these  six  States 
have  h(.<elve  Senators  in  a  body  of  only  Jiinety,  —  as  many  as  the  six  greatest 
States  in  the  Union  with  a  population  ten  times  as  great !  In  other  words,  the 
people  of  these  older  and  larger  States  have  only  ten  per  cent  of  the  per  capita 
representation  in  the  United  States  Senate  that  these  six  silver  States  have,  and  yet 
these  States  are  clamorous  against  the  East  on  account  of  political  supremacy  ! 

The  average  wealth  of  these  six  States  in  real  and  personal  property  exceeds 
that  of  any  Eastern  or  Middle  State,  and  is  more  than  double  that  of  the  North 
Atlantic  division.  It  is,  per  capita,  $2,796,  as  against  $1,232  for  the  North  At- 
lantic States,  and  $1,036  for  the  United  States."  The  average  increase  of  wealth 
per  capita  in  the  six  silver  States  from  1880  to  1890  was  $1,398,  as  against  $23 
per  capita  in  the  North  Atlantic  States.^  In  other  words,  while  the  average 
increase  of  wealth  for  each  person  in  Maine,  New  Hampshire,  Vermont,  Massa- 
chusetts, Rhode  Island,  Connecticut,  New  York,  New  Jersey,  and  Pennsylvania, 
from  1880  to  1890,  was  $23  ;  in  the  six  silver  States,  every  person  on  an  average 
increased  his  wealth  $1,398,  or  more  than  doubled  it !  This  is  the  way  the  greedy 
East  has  legislated  against  the  poor  and  downtrodden  West. 

It  is  clear  that  the  influence  of  gold  has  been  far  less  than  that  of  silver  in 
creating  public  sentiment  and  affecting  legislation,  and  yet  it  is  said  that  gold  has 
appreciated  to  double  its  value  because  of  the  vianipulation  of  Wall  Street !  The 
only  necessary  and  the  final  answer  to  this  is,  that  in  1873  the  world's  gold  pro- 
duction was  $96,000,000;  in  1895  it  was  $199,500,000,  or  more  than  doubled. 
But  the  conclusive  fact,  which  disposes  absolutely  of  the  pretence  that  the  main- 
tenance of  the  gold  standard  has  caused  the  fall  in  the  price  of  wheat,  is,  that 

1  Territories.  2  Abstract  of  Eleventh  Census  of  the  United  States,  p.  198.  3  /dem. 

26 


in  1872  the  money  in  circulation  in  the  United  States  was  less  than  $750,000,000, 
mostly  in  paper,  when  gold  was  at  a  premium  of  ten  per  cent;  and  it  is  now  over 
$1,500,000,000,  or  more  than  tivicc  as  muc/i,  every  dollar  /wing  at  a  parity  with  gold. 
4.  The  Free  Coinage  of  Silver  not  a  Cure.  —  If  the  free  silver  theorist 
is  mistaken  in  his  diagnosis,  his  prescription  has  no  value.  IJut  he  is  more  obliv- 
ious of  facts  in  his  remedy  than  in  explaining  the  disease.  He  argues  that  the 
free  coinage  of  silver  would  increase  the  price  of  agricultural  products,  and  thus 
relieve  the  farmer  from  the  curse  of  low  prices.     Let  us  see  if  this  is  so. 

The  free  coinage  of  silver  would  either  restore  the  ratio  of  16  to  i,  or  it  would 
not.  Let  us  suppose  for  a  moment,  although  we  have  shown  this  to  be  impos- 
sible, that  it  would.  The  silver  dollar  will  then  continue  to  be  as  good  as  a  gold 
dollar,  but  it  will  be  no  better.  What,  then,  is  to  increase  the  price  of  wheat .'  If 
the  inflation  of  the  currency  raises  the  price  of  wheat  above  the  gold  price  in 
the  world's  market,  this  currency  being  equal  in  value  to  gold,  the  importation  of 
wheat  at  gold  prices  7vill  afford  a  profit.  Importation  may  be  depended  upon, 
until  the  price  is  depressed  to  the  gold  price  in  the  world's  market.  The  Ameri- 
can farmer  would  thereby  create  a  competitor  in  his  own  domestic  market. 
Nothing  could  save  him  from  returning  to  the  gold  price  in  the  world's  market, 
'  £xcept  a  protective  tariff  on  b?-eadstuffs,  but  this  is  no  part  of  the  free  silver 
programme. 

Let  us  now  suppose,  which  is  practically  certain,  that  the  free  coinage  of 
silver  would  not  restore  the  ratio  of  16  to  i.  What  would  follow  from  this?  The 
.  money  of  the  United  States  being  thereby  depreciated  in  value,  it  would  require 
;  more  of  it  to  represent  present  value  ;  therefore  prices  would  rise,  as  they  always 
"will  when  the  currency  is  depreciated.  Would  that  increase  the  demand  for 
wheat.''  Not  at  all.  If  foreign  countries  imported  American  grain,  it  would  be 
at  no  higher  price  than  the  gold  price  in  the  world's  market,  —  that  is,  at  the  present 
price.  Reduced  to  a  gold  basis,  the  price  would  be  no  higher  than  it  is  now. 
Everything  would  be  valued  on  a  gold  basis,  but  paid  for  on  a  silver  basis.  It 
should  be  clearly  seen,  once  far  all,  that  no  commodity  can  possibly  rise  above  its 
gold  price  in  the  'W07-ld  's  market  without  attracting  competitio7i  atid  a  consequent  fall 
to  this  basis,  except  upon  one  condition,  namely,  that  its  price  is  maintained  by  a  Ppo- 
TECTivE  Tariff.  Upon  a  gold  basis,  or  upon  an  international  bimetallic  basis, 
a  protective  tariff  can  accomplish  this  result ;  but  it  can  never  be  accomplished 
by  inflating  the  currency.  The  interest  of  the  American  farmer,  therefore,  lies 
in  building  up  a  diversified  industry  in  the  United  States,  which  will  secure  a 
better  market  by  withdrawing  competition  in  the  field  and  promoting  prosperity 
in  the  workshop;  and  in  extending  American  commerce,  loading  our  own  ships 
with  our  own  grain,  and  making  Chicago,  instead  of  London,  the  grain  mart  of 
the  world 

X.    COMMERCIAL   HONOR. 

The  only  foundation  of  commercial  success  is  commercial  honor,  ■which 
the  free  coinage  of  silver  -wrould  openly  violate. 

1.    The  Foundation  of  Credit.  —  The   commercial   system  of   the  world 

would  be  impossible,  and  we  should  return  to  the  barbaric  method  of  primitive 

times  in  matters  of  exchange,  if  it  were  not  for  the  existence  of  what  is  known 

as  "  credit."     W' hen  subjected  to  analysis,  this  is  found  to  be  public  faith  in  a 

system  of  legally  sustained  equity  between  men  and  nations.     It  is  the  product 

of  a  long  moral  and  intellectual  evolution,  and  represents  the  best  development 

27 


of  the  human  conscience  and  the  human  intellect.  It  assumes  the  right  of  per- 
sonal property,  the  protection  of  contracts  under  the  law,  and  the  justice  of  ulti- 
mate legal  tribunals.  Men  believe  in  it  because  they  believe  in  them,  and  a  blow 
at  any  one  of  them  is  an  injury  to  public  and  private  credit  to  that  extent. 

Every  thoughtful  man  is  able  to  see,  in  the  Chicago  Platform,  hostility  to  all 
of  the  three  assumptions  upon  which  public  and  private  credit  rests.  In  so  far 
as  it  proposes  the  payment  of  debts  contracted  upon  a  gold  basis  with  money 
conformed  to  a  silver  standard,  in  the  face  of  the  present  disparity  between  them, 
it  is  an  assault,  however  covert,  upon  the  right  of  property.  In  so  far  as  it  pro- 
poses to  pay  the  bonds  of  the  United  States  in  money  inferior  to  that  with  which 
they  were  bought,  it  assaults  the  legal  protection  of  contracts.  In  so  far  as  it 
brings  under  criticism  the  decisions  of  the  Supreme  Court,  the  highest  tribunal 
in  the  land,  and  proposes  to  modify  its  judgments,  it  aims  a  blow  at  public  confi- 
dence in  our  system  of  justice.  The  principles  and  purposes  alleged  are,  there- 
fore, revolutionary  in  their  nature,  and  would  tend  to  unsettle  the  credit  of  the 
men,  communities,  or  nation  that  should  deliberately  apply  them. 

2.  Free  Coinage  as  Repudiation.  —  In  the  light  of  the  foregoing  pages, 
there  can  remain  no  doubt  that  the  free  and  unlimited  coinage  of  silver  at  the 
ratio  of  i6  to  i,  when  a  standard  silver  dollar  is  worth  only  about  fifty  cents  as 
bullion,  and  when  there  is  not  a  mint  in  Europe  open  to  free  coinage,  would  be 
an  act  of  repudiation.  The  only  meaning  of  the  proposition  is  that  the  United 
States  is  to  lend  iinlhnited  credit  to  an  issue  of  money  without  anything  in  return, 
and  is  to  pay  her  debts  with  such  money.  If  the  ratio  were  maintained,  the  depos- 
itor of  silver  at  the  Mint  would  take  away  double  the  value  he  brought,  without 
making  any  return  to  the  government.  Why  should  the  government  throw  away  its 
credit  in  this  fashion  ?  and  having  become  careless  of  it  to  an  "  unlimited  " 
extent,  how  could  it  preserve  its  credit .''  If  the  ratio  were  not  maintained,  the 
result  would  be  a  depreciation  of  all  the  national  money  except  gold,  which  would 
then  be  at  a  premium.  In  that  case  the  government  would  either  have  to  bear  a 
new  burden  to  obtain  gold  for  the  payment  of  its  gold  debt,  or  partially  repudi- 
ate that  debt  by  payment  in  an  inferior  money.  In  the  present  condition  of 
things  a  dollar  of  412.5  grains  of  silver  is,  of  necessity,  a  credit  dollar.  Its  un- 
limited issue  would  make  it  a  dishonest  dollar.  Dishonest  payment  is  the  ruin 
of  credit,  and  the  ruin  of  credit  is  the  ruin  of  prosperity. 

XI.    FALLACIES   OF   THE   FREE   COINAGE   THEORY. 

The  injustice  and  inexpediency  of  the  free  and  unlimited  coinage  of  silver 
are  evident  from   the   analysis   of  the  question  already  given.     It  re 
mains,  ho-wever,  to  point   out  that   the  strategic  points  upon  which 
the  advocates  of  the  theory  base  their  reasoning  are  transparently 
fallacious. 

1.  The  Fallacy  of  Method.  —  A  subject  of  such  profound  practical  im- 
portance demands  the  patient  and  impartial  examination  of  facts.  This  the 
advocates  of  the  free  coinage  of  silver  carefully  avoid.  In  place  of  the  facts, 
they  set  up  sectional  and  class  prejudices,  proposing  to  use  animosity  in  the 
place  of  conviction.  The  accepted  Bible  of  the  silver  movement  is  Coin's  Fi)uin- 
cial  School,  by  W.  H.  Harvey,  which  deals  mainly  in  caricature,  sophistry,  and 
inflammatory  perversions  of  fact.  It  is  skilfully  adapted  to  appeal  to  the  igno- 
rant and  discontented,  but  never  ventures  upon  solid  argument. 

In  speaking  of  the  monetary  unit,  Mr.  Harvey  implies  that  silver  was  choser 

28 


as  the  original  and  exclusive  unit  of  value,  because,  "  in  the  days  of  Washington 
and  Jefferson,  our  Revolutionary  forefathers  had  a  hatred  of  England,  and  an  inti- 
mate knowledge  of  her  designs  on  this  country!'"  Then  follows  this  flourish  of 
rhetoric  :  "  They  had  fought  eight  long  years  for  their  independence  from  lirit- 
ish  domination  in  this  country;  and  when  they  had  seen  the  last  redcoafleave 
our  shores,  they  settled  down  to  establish  a  permanent  government,  and  among 
the  first  things  they  did  was  to  make  371-25  grains  of  silver  the  unit  of  values. 
That  much  silver  was  to  constitute  a  dollar.  And  each  dollar  was  a  unit.  They 
then  provided  for  all  other  money  to  be  counted  from  this  unit  of  a  silver  dollar  !  "  ^ 

Aside  from  the  utterly  unhistorical  character  of  these  statements,  they  appeal 
to  no  other  impulse  than  that  of  hatred  and  vindictiveness.  The  silver  dollar  is 
represented  as  having  a  sacredness  to  Americans  like  the  Stars  and  Stripes ;  so 
that  it  becomes  a  patriotic  duty  to  coin  it  without  limit,  even  at  a  loss,  because 
our  forefathers  adopted  it  as  a  sign  of  independence  and  as  an  act  of  rebuke  to 
a  foreign  power  ! 

But  what  are  the  facts  ?  luigland  did  not  adopt  the  single  gold  standard 
until  18 16.  The  adoption  of  the  silver  dollar  by  Congress  in  1792  was  not 
"  among  the  first  things  "  our  Revolutionary  forefathers  did  ;  they  did  not  adopt 
silver  to  show  "  their  independence  ;  "  they  did  not  discard  gold  on  account  of 
"  designs  on  this  country,"  or  from  "  hatred  of  England  ;  "  and  they  did  not 
make  silver  "the  unit  of  values,"  or  decide  that  371-25  grains  of  silver  should 
alone  "  constitute  a  dollar." 

2.  The  Fallacy  of  the  Unit.  —  The  unit  in  the  system  of  coinage  estab- 
lished by  the  law  of  1792  is  not  371.25  grains  of  silver.  The  unit  is  the  "dollar;" 
and  the  dollar  is  related  to  a  bimetallic  standard  of  value,  gold  and  silver,  at  a 
ratio  of  15  of  silver  to  i  of  gold,  by  weight.  The  coin  first  named  is  the  gold 
"  eagle."  This  was  to  contain  "  two  hundred  and  forty-seven  and  four-eighths  of 
a  grain  of  pure,  or  two  hundred  and  seventy  grains  of  standard,  gold."  The 
silver  dollar  was  to  contain  "three  hundred  and  seventy-one  grains  and  four- 
sixteenths  parts  of  a  grain  of  pure,  or  four  hundred  and  sixteen  grains  of  stand- 
ard, silver.  .  .  .  The  proportional  value  of  gold  to  silver  in  all  coins  which  shall 
by  law  be  current  as  money  within  the  United  States  shall  be  as  fifteen  to  one, 
according  to  quantity  in  weight,  of  pure  gold  or  pure  silver ;  that  is  to  say,  every 
fifteen  pounds  weight  of  pure  silver  shall  be  of  equal  value  in  all  payments  witli 
one  pound  lueight  of  pure  goldP  " 

Is  it  true,  in  the  light  of  this  law,  that  the  unit  of  value  is  371.25  grains  of  sil- 
ver; or  that,  "in  considering  which  of  these  tw^o  metals  they  would  thus  favor  by 
making  it  the  unit,  they  were  led  to  adopt  silver  because  it  was  the  most  reliable  "  / 
"The  one  selected,"  says  Mr.  Harvey,  "would  thereafter  be  unchangeable  in 
value.  .  .  .  The  metal  in  it  could  not  be  worth  less  than  a  dollar,  for  it  would  be 
the  unit  of  value  itself !  "  ^  We  have,  tlien,  the  preposterous  statement,  that 
371.25  grains  of  silver  can  never  change  its  value ;  because  it  is  the  unit ! 

But  a  careful  reading  of  the  law  shows  that  the  ultimate  unit  of  value  is  "one 
pound  weight  of  pure  gold.''  Hamilton  himself  so  understood  it;  for  he  said  of 
the  Spanish  silver  dollar,  "  That  species  of  coin  has  7iei-er  had  any  settled  or  standard 
value,  .  .  .  while  gold  has  a  fixed  price  by  weight.'''  *  He  fixed  his  ratio  by  taking 
15  pounds  of  silver  to  i  of  gold. 

1  Coin's  Financial  School,  p.  7.  S  Coin's  Financial  School,  p.  8. 

eoj  2  Act  of  .Aipril,  1792.  *  Report  on  the  Establishment  of  a  Mint. 

29 


The  following  table  shows  the  true  relations  of  the  whole  subject :  — 
Arithmetical  unit  =  the  dollar.  Physical  unit  =  a  dollar  of  gold  or  of  silver. 


Physical  parts 
of  a  dollar 


quarter-dollar.  physical  multiples  _    |  double  eagle  ($20). 

of  a  dollar  1  half-eagle  ($5). 

I  quarter-eagle  ($2.50). 


dime 

half-dime 

cent. 


Bimetallic  stan-    ^  ( 15  pounds  of  silver  equiva-     Ultimate  Standard   ^  ^  ^  r,o\im\  of  gold, 
dard  I    lent  to  I  pound  of  gold.  of  Value  J 

Hamilton  started  with  ^vA/ as  the  basis  of  all  his  calculations.  Finding  that 
24.75  grains  of  gold  had  been  regarded  as  equal  to  a  Spanish  milled  dollar,  a 
coin  in  current  use,  not  by  choice,  but  by  circumstances  of  trade,  he  fixed  the 
value  of  the  dollar  as  equivalent  to  24.75  grains  of  gold.  Multiplying  this  by  15, 
—  the  ratio  decided  upon,  —  he  arrived  at  the  result,  371-25  grains  of  silver,  as 
the  proper  weight  of  the  silver  dollar.  Had  his  mental  operation  been  what  the 
silver  theorists  represent,  he  would  have  taken  as  his  basis  of  calculation,  without 
any  reason,  371.25  grains  of  pure  silver. 

3.  The  Fallacy  of  the  Quantitative  Ratio.  —  The  most  convincing  thing 
in  the  free  coinage  theory  at  first  sight  is  the  brilliant  demonstration  that  all  the 
silver  in  the  world  stands  to  all  the  gold  in  the  world  at  a  ratio  of  15;:^  to  i.^ 
Supposing  that  Mr.  Harvey,  or  any  other  living  man,  knows  exactly  how  much  of 
the  two  metals  there  is  in  the  world,  —  which  is  highly  improbable,  —  this  ratio 
merely  proves  that,  if  all  the  people  in  the  world  would  use  gold  mid  sih'er  inter- 
changeably at  this  ratio,  the  metals  iconld  hair  this  relative  value.  As  a  ground  for 
universal  bimetallisfn,  —  assuming  that  the  facts  are  as  stated,  and  that  more 
money  is  universally  needed,  —  this  quantitative  ratio  may  be  of  interest. 

4.  The  Fallacy  of  the  Restored  Ratio.  —  The  fact  brought  to  light  in  the 
last  paragraph,  —  assuming  it  to  be  a  fact,  —  is,  however,  profoundly  significant 
in  relation  to  the  adoption  of  free  coinage  by  the  United  States  alone.  If  the 
normal  ratio  of  value  is  15^  to  i,  based  upon  all  the  gold  and  silver  in  the  world, 
it  is  evident  that  free  coinage  of  silver  by  the  United  States  alone,  when  all  the 
European  mints  are  closed  to  silver,  would  attract  a  disproportionate  amount  to 
our  mints ;  so  that  the  quantity  of  silver  would  prevent  the  re-establishment  of 
the  ratio.  In  order  to  establish  and  sustain  it,  we  should  have  to  coin  all  the 
surplus  stock  and  annual  product  of  the  7uorld !  If  Mr.  Harvey's  figures  are  right, 
universal  free  coinage  of  both  gold  and  silver  would  be  required  to  keep  the 
market  ratio  at  the  quantitative  ratio.  Does  he  expect  the  United  States  to  do 
this  alone  1  His  expectation  is  evident  from  his  alternative  :  "Gold  may  go  out 
of  circulation,"  he  says,  ''  but  its  doing  so  does  not  disturb  the  practical  effect  of 
bimetallic  prices.  There  should  be  a  law  making  it  a  forfeiture  of  the  debt  to 
discriminate  in  favor  of  one  form  of  national  currency  against  another.  The 
present  law  allowing  gold  to  be  named  in  the  bond  is  statutory  treason."  "  His 
remedy  for  want  of  parity  is,  "  Put  less  gold  in  the  gold  dollar.  Bring  the  weight 
of  the  gold  dollar  down  till  they  are  on  a  parity."  ^ 

5.  The  Fallacy  of  Falling  Prices.  —  There  is  an  appearance  of  serious 
and  honest  argument  in  the  tables  of  comparative  prices,  by  which  an  attempt  is 
made  to  show  that  a  given  amount  of  silver  will  buy  the  same  amount  of  com- 
modities, roughly  speaking,  as  it  would  twenty  years  ago ;  while  a  given  amount 
of  gold  will  buy  a  greater  quantity.     It  looks  for  a  moment  as  if  silver  is,  after 

1  Coin's  Financial  School,  Appendix,        2  Coifi's  Financial  School,  pp.  137,  138.         3  Idem,  p.  138. 

30 


all,  a  less  variable  standard  of  deferred  payments  than  gold,  and  as  if  gold  had 
become  too  rare  to  meet  the  demands  of  commercial  life. 

The  bearing  of  this  upon  the  relation  of  debtor  and  creditor  also  is  evident. 
If  prices  have  fallen  greatly  within  the  last  twenty  years,  the  money  that  was 
loaned  then  seems  to  be  less  valuable  than  the  money  that  must  be  paid  now ; 
for  it  has  apparently  acquired  an  increased  purchasing  power. 

The  fact  that  many  commodities  have  fallen  in  price  cannot  be  disputed  ; 
but  it  is  clear,  from  the  declining  rates  of  interest,  that  money  is,  on  the  whole, 
less  valauble  than  it  was  twenty  years  ago.  As  regards  the  alleged  wrong  to  the 
debtor,  he  could  have  refunded  his  debt  upon  good  security  at  any  time  within 
ten  years,  at  a  lower  rate  of  interest.  Mow  can  money  be  worth  more,  if  it  can 
be  borrowed  for  less .'' 

Under  "True  Valuation  of  Real  and  Personal  Property  "  in  the  following  table, 
which  includes  only  "actual  tangible  property,"  it  will  be  seen  that  in  the  decade 
i88o-i8go  values  of  this  class  increased  in  the  aggregate  more  than  49  per  cent, 
with  a  large  increase  per  capita,  which  indicates  how  the  country  was  growing 
rich.  Under  'Prices  and  Wages"  it  is  shown  that,  as  compared  with  i860 ///f 
average  prices  of  85  principal  articles  had  fallen  less  than  4  per  cent,  while  the 
average  increase  of  wages  in  all  occupations  was  over  68  per  cent. 


TRUE  VALUATION  of  REAL  and  PERSONAL  PROPERTY.' 

PRICES  AND  WAGES.* 

YEARS. 

TOTAL. 

PER   CAPITA. 

PER   CENT  OF 
INCREASE. 

YEARS. 

PRICES. 

WAGES. 

1880 
1890 

$43,642,000,000 
65,037,091,000 

$       870 
1,036 

49.02 

i860 
1880 
1890 

$100.00 

103.04 

96.20 

$100.00 
143.00 
168.60 

We  see,  therefore,  that  the  fall  in  prices  relates  to  manufactured  articles  and 
to  farm  products. 

The  obvious  reason  for  the  fall  in  prices  of  manufactured  articles  is  the  im- 
proved processes  of  production.  Better  machinery,  better  methods,  close  com- 
petition, new  transportation  facilities,  have  combined  to  cheapen  this  class  of 
articles.  Therefore,  a  dollar  will  buy  more  of  them  than  it  ever  would  before. 
And  yet,  there  is  no  scarcity  of  money.  The  whole  case  is  comprised  in  the 
statement,  that  improved  means  of  production  have  made  a  dollar  go  farther 
than  it  did  twenty  years  ago,  and  this  cannot  be  regarded  as  a  public  calamity. 
If  the  American  people  prefer  a  dollar  which  they  can  spend  more  quickly  and  get 
less  for,  the  free  coinage  policy  provides  for  it. 

Agricultural  prices  have  fallen,  because  the  methods  and  extent  of  produc- 
tion on  new  lands  have  so  cheapened  the  smaller  yield  of  old  lands  that  the 
farmer's  life  has  grown  more  discouraging  and  his  debts  have  seemed  harder  to 
pay- 
All  this  is  true  ;  but  does  it  justify  the  free  and  unlimited  coinage  of  silver  ? 
Will  that  constitute  a  just  and  expedient  relief  ?  This  has  not  been  shown  by 
any  argument  thus  far  advanced  in  defence  of  the  free  coinage  theory.  On  the 
other  hand,  it  is  evident  that  a  financial  panic,  the  loss  of  our  foreign  credit,  the 
instability  of  values,  the  open  sea  of  "  unlimited  "  cheap  money,  would  be 
worse  for  all  classes  than  the  present  condition  of  public  and  private  security. 
An  even  and  honorable  measure  of  values  is  the  strong  foundation  of  business 

1  Abstract  of  the  Eleventh  Census,  p.  192.  2  Report  of  the  Senate  Finance  Comniittee,  1S93. 

31 


/ . 
prosperity.  It  will  be  wise  for  the  American  people  to  see  their  course  plainly, 
before  they  indulge  in  legislative  experiments  to  give  an  artificial  value  to  pro- 
ducts which  the  growth  of  enterprise  has  cheapened,  and  to  absolve  the  debtor 
from  his  honorable  obligations.  The  only  advantages  which  could  possibly  follow 
from  a  free  coinage  law  are  such  as  belong  to  a  depreciated  currency. 


Xn.    CONCLUSION. 

It  will  doubtless  be  represented  in  the  coming  campaign  that  the  proposed 
free  coinage  law  would  give  us  an  "honest  dollar."  Those  who  have  read  this 
pamphlet  will  be  able  to  form  their  own  opinion  of  that:  but,  certainly,  the 
intentions  of  a  political  party  should  be  evident  from  its  platform.  We  have 
presented  elsewhere  the  financial  planks  of  the  two  leading  parties.  Before 
deciding  where  to  look  for  an  "  honest  dollar,"  it  may  be  well  to  compare  those 
platforms  again. 

The  Republican  platform  is  "  unreservedly  for  sound  money,"  "  unalterably 
opposed   to  every  measure  calculated   to  debase   our  currency,  or  impair  the 
credit  of  our  country."     It  favors   international  bimetallism,  but  proposes  to 
keep  our  silver  and  paper  currency  "at  parity  with  gold."     It  promises  to  main- 
tain  "  inviolably  the  obligations  of   the   United  States."     Now,   what  has  the 
Democratic   platform    to   say  about    "  sound   money,"    or  the    '"  credit   of   th( 
country,"  or  "parity  "  between  the  different  forms  of  money,  or  inviolable  "obli 
gations?"     Not  one  word.     On  the  contrary,  it  speaks  of  the  "burden  of  debt 
public  and  private,"  the   "enrichment"  and  "impoverishment"  of  classes  of 
citizens  by  each  other,  and  "financial  servitude  to  London."     It  demands  that 
debased  coinage  shall  be  made  legal  tender  for  all  debts,  public  and  private,  an( 
proposes  to  force  this  inferior  money  upon  the  people  by  prohibiting  contracts 
in  any  other.     It  is  not  difficult  to  determine,  from  the  platforms  of  these  tw( 
parties,  which  is  the  guardian  and  which  is  the  enemy  of  a  uniform  standard  ol 
value,  of  the  credit  of  the  country,  and  of  the  obligation  of  contracts.     The  one 
has   the   clear  ring   of   business   honor;   the  other  defines  its    aims  and    pur 
poses  in  terms  of  personal  greed  and  public  irresponsibility.     The  one  stands  fo 
law  and  equity  ;  the  other  declaims  of  revolution.     The  one  is  the  champion  o 
political  order  ;  the  other  is  the  pupil  of  social  anarchy.     The  one  calls  upoi 
the  American  people  to  unite  in  mutual  trust  and  helpfulness  to  maintain  thi 
public  credit ;  the  other  sets  class  against  class,  and  sows  the  seeds  of  mutua 
hatred  and  distrust.     Between  them  every  man  must  choose.    '        '     < 


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